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BIGBLOC Construction Ltd.

BSE: 540061 Sector: Industrials
NSE: BIGBLOC ISIN Code: INE412U01017
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NSE 09:45 | 18 Feb 34.25 -0.75
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OPEN 41.00
PREVIOUS CLOSE 41.00
VOLUME 17
52-Week high 41.80
52-Week low 21.20
P/E 256.25
Mkt Cap.(Rs cr) 58
Buy Price 41.80
Buy Qty 60.00
Sell Price 40.35
Sell Qty 90.00
OPEN 41.00
CLOSE 41.00
VOLUME 17
52-Week high 41.80
52-Week low 21.20
P/E 256.25
Mkt Cap.(Rs cr) 58
Buy Price 41.80
Buy Qty 60.00
Sell Price 40.35
Sell Qty 90.00

BIGBLOC Construction Ltd. (BIGBLOC) - Auditors Report

Company auditors report

To

The Members of

BIGBLOC CONSTRUCTION LIMITED

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of BigblocConstruction Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2019 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flows for the year ended onthat date and a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "the standalone financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of matter described in the 'Basis of QualifiedOpinion' Paragraph below the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2019 and its profit (financial performanceincluding other comprehensive income) its cash flows and the changes in equity for theyear ended on that date.

Basis of Qualified 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 thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

The company has not provided for Post-Employment Benefits and other long term employeebenefits under Defined Benefit Plans on accrual basis but provides the same as and whenthey become due for payment. This method of accounting of Post-Employment Benefits andother long term employee benefits under Defined Benefit Plans is in deviation with Ind 4S- 19 on Employee Benefits. 4s there is no actuarial report or basis ofcalculation available with the management of such Post-Employment Benefits and other longterm employee benefits the quantum of deviation cannot be ascertained. If the company hadfollowed the method accounting as per Ind 4S - 19 then employee benefit expensewould have increased and correspondingly Profit for the period would have reduced.

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.

Key Audit Matter Auditor's Response
1 Recoverability / Refund of Indirect tax receivables Principal Audit Procedures:
As at March 31 2019 Current assets in respect of withholding tax and others includes GST Credit and Disputed stamp duty payment totaling to Rs. 128.39 Lakhs. We have involved our internal experts to review the nature of the amounts recoverable the sustainability and the likelihood of recoverability upon final resolution.
Refer Note 12 to the Standalone Financial Statements.
2 Transactions with related parties Principal Audit Procedures:
Starbigbloc Building Material Pvt. Ltd. (wholly owned subsidiary): Our audit procedures included among others the following:
• Purchase of Goods of Rs. 1937.10 Lakhs; • We obtained an understanding of the process for identifying related party transactions performed a walkthrough and evaluated the design of controls related to the fraud risk identified;
• Advances given against supplies of goods of Rs. 445 lakhs;
• Sale of Goods of Rs. 12.32 Lakhs; • We verified that the transactions are approved in accordance with internal procedures including involvement of key personnel at the appropriate level;
• Loans given outstanding of Rs. 1082.02 Lakhs; and
• Interest received on loans given of Rs. 90.31 Lakhs.
We considered the related party transactions to be significant to the audit as the risk is that if these transactions are not conducted at arm's length and/or the accounting treatment of the rights and obligations of these transactions are not correct it could influence the results of the company. • We evaluated the business rationale of the transactions;
• We evaluated the rights and obligations per the terms and conditions of the agreements and assessed whether the transactions were recorded appropriately; and
• We determined whether the directors have disclosed relationships and transactions in accordance with Ind AS - 24 (refer to disclosure note 37).

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements and our auditor's report thereon. TheManagement Discussion and Analysis Board's Report including Annexures to Board's ReportBusiness Responsibility Report Corporate Governance and Shareholder's Information isexpected to be made available to us after the date of this auditor's report.

Our opinion on the financial statements does not cover the other information and wewill 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 when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

When we read the Management Discussion and Analysis Board's Report including Annexuresto Board's Report Business Responsibility Report Corporate Governance and Shareholder'sInformation if we conclude that there is a material misstatement therein we are requiredto communicate the matter to those charged with governance and describe actions applicablein the applicable laws and regulations.

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 Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

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 and 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 they could reasonably be expected to influence theeconomic decisions of users taken on the basis 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 international omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances.

• 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 our opinion.Our conclusions are based on the audit evidence obtained upto 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 standalone financial statementsthat individually 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 be 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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (ll) of section 143 ofthe Act we give in the Annexure a a statement on the matters specified in the paragraph3 and 4 of the Order to the extent applicable.

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

a) We have sought & 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 accounts as required by law have been kept by thecompany so far as appears from our examination of such books.

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisreport are in agreement with the books of account;

d) In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards prescribed under Section 133 of the Act except for Ind AS - 19on Employee Benefits in respect of provision for Long Term Employee Benefit & DefinedBenefit plans.

e) On the basis of the written representations received from the directors as on 3lstMarch 2019 and taken on record by the board of directors none of the directors isdisqualified as on 3lst 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"; and

g) 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 financial statements - Refer Note 29 (i) 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 were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

iv. the reporting on disclosures relating to Specified Bank Notes is not applicable tothe Company for the year ended March 31 2019.

For RKM & CO.
Chartered Accountants
Firm Registration No.: 108553W
(Deepak V. Bhatia)
Place : Surat Partner
Date : 29th May 2019 Membership No. 102465

Annexure "A" to the Independent Auditor's Report of Even date on theFinancial Statements of Bigbloc Construction Limited for year ended on 31st March 2019

(Referred to in Paragraph '1' under "Report on Other Legal and RegulatoryRequirements' of our report of even date)

i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified at reasonable intervals. In accordance with thisprogramme certain fixed assets were verified during the year and no materialdiscrepancies were noticed on such verification.

(c) Based on our audit procedures and the information and explanation received by uswe report that all title deeds of immovable properties of the company held as fixed assetsare held in the name of the company. In respect of one Land at Umargaon and Land atBoisar Palghar which were vested in the company in pursuance of Scheme of Arrangement(De-merger) of AAC Block Division of Mohit Industries Limited in the company and thoughthe scheme has become effective and according to order of the Gujarat High Court theimmovable properties are vested in the company however the procedure of the transfer oftitles in name of the company is pending as on date of audit report.

ii. Physical verification of inventory has been conducted by the management atreasonable intervals. The company has not maintained quantitative records of purchaseand consumption of Flyash (which is one of main Raw Materials) Stores & Spares andOther Consumable items. In the absence of such records it is not possible to ascertainthe discrepancy if any on such physical verification.

iii. The Company has granted unsecured loans to one company covered in the registermaintained under section 189 of the Companies Act 2013 ('the Act').

(a) In our opinion the rate of interest and other terms and conditions on which theloans had been granted to the company listed in the register maintained under Section 189of the Act were not prima facie prejudicial to the interest of the Company.

(b) As informed to us the principal and interest of above loans were repayable as andwhen demanded and accordingly repayments or receipts were regular as and when demanded bythe company.

(c) There are no overdue amounts in respect of the loans granted to the company listedin the register maintained under section 189 of the Act.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.

v. According to information & explanation given to us the company has not acceptedany deposit from the public.

vi. As explained to us the company is maintaining accounts and records prescribed bythe Central Government under section 148 (1) of the Companies Act 2013. However no suchaccounts/records were verified by us.

vii. (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund sales tax valueadded tax duty of customs duty of excise service tax GST cess and other materialstatutory dues have generally been regularly deposited during the year by the Company withthe appropriate authorities. The company has not deducted employees' state insurance andthus question of payment does not arise. However there has been delay in depositingthe income tax and dividend distribution tax by the company.

According to the information and explanation given to us no undisputed outstandingamounts in respect of provident fund sales tax duty of customs duty of excise valueadded tax service tax GST cess were in arrears as at 31st March 2019 for a period ofmore than six months from the date they became payable. However undisputed income taxoutstanding of Rs. 48.14 Lakhs and dividend distribution tax of Rs. 7.28 Lakhs were inarrears as at 31st March 2019 for period of more than six months from the date theybecame payable.

(b) According to the information and explanations given to us there are no materialdues of duty of customs Goods and Service Tax Sales Tax Service Tax Excise Duty ValueAdded Tax and Cess which have not been deposited with the appropriate authorities onaccount of any dispute. Details of Income Tax which have not been deposited as on 31March 2019 on account of disputes are given below:

Name of The Statute Nature of Dues Amount (INR In Lakhs) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 2.49 A.Y 2016-17 (F.Y. 2015-16) Commissioner of Income Tax (Appeals)

viii. I n our opinion and according to the information and explanations given to usthe company has not defaulted in repayment of loans or borrowing to the financialinstitutions banks or government. As explained to us no debenture has been issued by thecompany.

ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments). According to information and explanations givento us we are of the opinion that the term loans have been applied for the purposes forwhich they were raised.

x. According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during thecourse of our audit.

xi. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

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 applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

xiv. According to the information and explanations give 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.

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

xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For RKM & CO.
Chartered Accountants
Firm Registration No.: 108553W
(Deepak V. Bhatia)
Place : Surat Partner
Date : 29th May 2019 Membership No. 102465

Annexure "B" to the Independent Auditor's Report of Even date on theFinancial Statements of Bigbloc Construction Limited for year ended on 31st March 2019

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 BigblocConstruction Limited ("the Company") as of 31st March 2019 in conjunction withour audit of 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 ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

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 Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence 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 auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

Commensurate to the size and nature of the business we believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for our audit opinion onthe Company's internal financial controls system over 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 financial statements for external purposes 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material 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 or procedures may deteriorate.

Opinion

According to the information and explanations given us and based on our audit thefollowing material weakness has been identified as at March 31 2019:

i) The Company did not have an appropriate internal control system for inventory withregard to purchase and consumption of Flyash (which is one of main Raw Materials) Stores& Spares and other consumables. The physical verification of inventory is carried outby the management at reasonable interval but quantitative records of inventory of purchaseand consumption of Flyash Stores & Spares and other consumables are not maintained bythe company. This could potentially result in discrepancy in inventory not prevented ordetected in timely manner.

A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements willnot be prevented or detected on a timely basis.

In our opinion considering the nature of business size of operation andorganizational structure of the entity except for possible effects of the materialweakness described above on the achievement of the objectives of the control criteria theCompany has maintained in all material respects adequate internal financial controlsover financial reporting and such internal financial controls over financial reportingwere operating effectively as of March 31 2019 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2019financial statements of the Company and the material weakness does not affect our opinionon the financial statements of the Company.

For RKM & CO.
Chartered Accountants
Firm Registration No.: 108553W
(Deepak V. Bhatia)
Place : Surat Partner
Date : 29th May 2019 Membership No. 102465