TO THE MEMBERS OF
BIL ENERGY SYSTEMS LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of BIL ENERGY SYSTEMS LIMITED("the Company") which comprise the Balance sheet as at March 31 2019 theStatement of Pro t and Loss the Cash Flow Statement for the year then ended and a summaryof significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Management is responsible for the matters stated in section 134(5) of theCompanies 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 Indian Accounting Standards specified in theCompanies (Accounts) Rules 2015 (as amended) under Section 133 of the Act Theseresponsibilities also includes the maintenance of adequate accounting records inaccordance with the provision of the Act for safeguarding of the assets of the Company andfor preventing and detecting the frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial control that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
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 there under.
We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act and other applicable authoritative pronouncements issued by theInstitute of Chartered Accountants of India. Those Standards and pronouncements requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.
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 but not for the purpose of expressing an opinion onwhether the Company has in place an adequate internal financial controls system overfinancial reporting and the operating effectiveness of such controls.
An audit also includes evaluating the appropriateness of accounting policies used andthe reasonableness of the accounting estimates made by Company's directors as well asevaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the financial statements.
Basis for Qualified Opinion
(a) With regard to pending confirmation of balances of trade receivable.
The Company has sent letters to customers in respect of trade receivables forconfirming balances as at March 31 2019 but in most of the cases the customers have notsent written confirmation confirming the balance outstanding as at March 31 2019. In theabsence of confirmation any provision to be made for adverse variation in the carryingamounts of trade receivable is not quantified.
(b) With regard to unsecured loans given to party not covered in the registermaintained under section 189 of the Companies Act 2013
The Company has sent balance confirmation letters to parties who are not covered in theregister maintained under section 189 of the Companies Act 2013 but in most of the casesthe company have not received written confirmation confirming the balance outstanding asat March 31 2019. Further in respect of loans granted repayment of the principal amountwas not as stipulated and payment of interest has also not been regular.
(c) Regarding non provision of demand of र215.82 Crores received from StateBank of India in respect of Corporate Guarantee given by the company in respect of LoanFacilities availed by Bil Power Limited
The lender Bank of Bilpower Limited has pursuant to certain corporate guarantee givenby the company demanded from the company their dues from Bilpower Limited amounting toर 215.82 crores. No provision has been made in the accounts for the probable lossthat may arise on account of above demand of र 215.82 crores.
(d) Regarding non provision of interest on various loans availed from State Bank ofIndia for the financial year 2018-19
The Company has not provided for interest payable to State Bank of India amounting toर 1663.33 Lacs for year ended 31st March 2019. The company has also not made anyprovision for penal interest claimed by Bank. As a result the pro t for the year ended31st March 2019 is overstated by र 1663.33 Lacs & Current liabilities as at 31stMarch 2019 are also understated by र 1663.63 Lacs and also Reserves are overstatedby र 1663.33 Lacs.
The amount of penal interest cannot be quantified as the details have not been receivedfrom the bank. Also for the financial year 2017-18 2016-17 2015-16 & 2014-15 thecompany has not provided for interest payable to State Bank of India amounting to र5030.35 lacs and as a result the accumulated losses in the Balance Sheet are understatedby र 6693.68 lacs upto 31st March 2019.
(e) With regarding Physical verification of Inventory:
The company has not conducted periodic physical verification of inventory at reasonableintervals. In respect of traded stock at Mumbai Head Office the details of finished goodsstock storage location is not available for our verification.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters described in the basis for qualifiedopinion paragraph the aforesaid 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 March 31 2019 and its Balance Sheet Pro t and Loss and cash flows statement forthe year ended on that date.
Report on other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")as amended issued by the Central Government of India in terms of sub-section (11)of section 143 of the Act we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order.
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 Statement of pro t and Loss and Cash Flow Statement dealt withby this report are in agreement with the books of account.
(d) Except for the effects of the matters described in the basis for qualifiedopinion paragraph in our opinion the Balance Sheet the Statement of Pro t and Losscomply with the Accounting Standards specified under section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164(2) of theAct.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
(g) With respect to the other matters included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to ourbest of our information and according to the explanations given to us:
(h) The company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 26 to the financial statements;
(i) The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.
(j) There has been no delay in transferring amount required to be transferred to theInvestors Education and Protection Fund by the Company.
For DALAL & KALA ASSOCIATES
(CA Anand Drolia)
Firm Registration No.: 102017W
Date: 13th May 2019
UDIN : 19036718AAAAAF3263
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
In the Annexure as required by the Companies (Auditor's Report) Order 2015 issued bythe Central Government in terms of Section 143 (11) of the Companies Act 2013 on thebasis of checks as we considered appropriate we report on the matters specified inparagraph 3 and 4 of the said order to the extent applicable to the Company.
1. In respect of Fixed Assets:
(a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets are physically verified by the Management according to a phasedprogramme 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 the nature of itsassets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies have been noticedon such verification.
(c) The title deeds of immovable properties as disclosed in Note 2 on fixed assets tothe financial statements are held in the name of the Company.
2. In respect of Inventories:
The company has not conducted periodic physical verification of inventory at reasonableintervals. In respect of traded stock at Mumbai Head Office the details of traded stockstorage location not available for our verification.
3. The Company has not granted unsecured loans to any companies covered in the registermaintained under Section 189 of the Act.
4. In our opinion in respect of loans investments guarantees and security theprovisions of section 185 has been complied & section 186 has not been complied.
5. In our opinion and according to the information and explanations given to us theCompany has not accepted deposits from the public and therefore the provisions containedin Sections 73 to 76 of the Act and Rules framed there under and any directive issued bythe Reserve Bank of India are not applicable to the Company.
6. As per information and explanation given by the management the company hasmaintained cost records as specified under Section 148(1) of the Act. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.
7. According to the information and explanations given to us and the records of theCompany examined by us in our opinion the Company is generally irregular in depositingthe undisputed statutory dues including Goods and Service Tax TDS Sales taxProfessional Tax etc.
(a) Following are the dues which are due since more than six months but still not paidor paid at later dates.
|Nature of Statute ||Natures of Dues ||Amount ||Period to which the amount relates ||Date of Payment |
| || ||(Rs. in Lacs) || || |
|Sales Tax Act ||VAT ||29.02 ||F.Y.2011-12 ||Still not paid |
|Sales Tax Act ||VAT ||93.78 ||F.Y.2012-13 ||Still not paid |
|Sales Tax Act ||VAT ||68.25 ||F.Y.2013-14 ||Still not paid |
|Sales Tax Act ||VAT ||37.28 ||F.Y.2014-15 ||Still not paid |
|Tax Deducted at Source ||TDS ||0.84 ||F.Y.2018-19 ||Paid in April 2019 |
b) According to the records of the Company Income-Tax and Sales Tax which have not beendeposited on account of disputes and the Forum where the dispute is pending are as under:
|Nature of Statute ||Financial Year ||Nature of Dues Pending ||Amount ||Forum Where Dispute is pending |
| || || ||(Rs. in Lacs) || |
|Sales Tax Act ||F.Y.2010-11 ||(MVAT) Sales Tax Demands pending in appeals ||338.75 ||Deputy/Joint Commissioner of Sales Tax (Appeal) |
| ||F.Y. 2012-13 || || || |
| ||F.Y.2013-14 || || || |
|Sales Tax Act ||F.Y.2010-11 ||(CST) Sales Tax Demands pending in appeals ||535.76 ||Deputy/Joint Commissioner of Sales Tax (Appeal) |
| ||F.Y.2011-12 || || || |
| ||F.Y.2012-13 || || || |
| ||F.Y.2013-14 || || || |
|Income Tax Act ||F.Y. 2011-12 ||Income Tax Demands including interest which is under dispute and pending in appeals ||2.75 ||CIT APP EAL |
8. Based on our Audit Procedures and as per the information and explanation given bymanagement the company has defaulted in repayment of dues to banks. The detail of periodand amount of default as ascertained by management is as follows:
|Name of the Bank ||Nature of dues ||Amount (Rs. Lacs) ||Due Date ||Date of Payment |
|State Bank of India ||Cash Credit facility Over Draft facility and Interest ||8543.21 ||Various Dates ||Not paid |
9. In our opinion and according to the information and explanations given to us noterm loans raised during the year. The company did not raise any money by way of publicoffer or further public offer (including debt instruments) during the year.
10. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
11. According to the information and explanations given to us and based on ourexaminations 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.
12. In opinion and according to information and explanations given to us the Companyis not a Nidhi Company and the Nidhi Rules 2014 are not applicable to it the provisionsof Clause 3(xii) of the Order are not applicable to the Company.
13. According to the information and explanations given to us and based on ourexaminations of the records of the company the Company has entered into transactions withrelated parties in compliance with the provisions of Sections 177 and 188 of the Act. Thedetails of such related party transactions have been disclosed in the financial statementsas required under Indian Accounting Standard (IND AS) 24 Related Party Disclosuresspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.
14. According to the information and explanations given to us and based on ourexaminations 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 under review. Accordingly the provisions of Clause 3(xiv) of the Order are notapplicable to the Company.
15. According to the information and explanations given to us the Company has notentered into any non cash transactions with its directors or persons connected with him.Accordingly the provisions of Clause 3(xv) of the Order are not applicable to theCompany.
16. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.
For DALAL & KALA ASSOCIATES
(CA Anand Drolia)
Firm Registration No.: 102017W
Date: 13th May 2019
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act
We have audited the internal financial controls over financial reporting of Bil EnergySystems Ltd. ("the Company") as of March 31 2019 in conjunction with our auditof the standalone 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 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 deemed to be prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of internal financial controls and bothissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company's internal financialcontrols 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 of records that in reasonabl detail accuratelyand fairly reflect the transactions and dispositions of the assets of the company;
(2) Provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised 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 or procedures may deteriorate.
According to the information and explanations given to us and based on our audit thefollowing weaknesses have been identified as at March 31 2019.
a) The Company did not have an appropriate internal audit system.
b) The Company did not have an appropriate internal control system for inventory withregard to periodic verification of stock.
In our opinion except for the possible effects of the weakness described above theCompany has in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at March 31 2018 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India.
For DALAL & KALA ASSOCIATES
(CA Anand Drolia)
Firm Registration No.: 102017W
Date: 13th May 2019