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Binani Industries Ltd.

BSE: 500059 Sector: Others
NSE: BINANIIND ISIN Code: INE071A01013
BSE 00:00 | 26 May Binani Industries Ltd
NSE 05:30 | 01 Jan Binani Industries Ltd
OPEN 5.47
PREVIOUS CLOSE 5.50
VOLUME 5333
52-Week high 6.03
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 17
Buy Price 5.47
Buy Qty 849.00
Sell Price 5.95
Sell Qty 100.00
OPEN 5.47
CLOSE 5.50
VOLUME 5333
52-Week high 6.03
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 17
Buy Price 5.47
Buy Qty 849.00
Sell Price 5.95
Sell Qty 100.00

Binani Industries Ltd. (BINANIIND) - Auditors Report

Company auditors report

To the Members of Binani Industries Limited

Report on the Audit of the Standalone IND AS Financial Statements

Qualified Opinion

We have audited the accompanying Standalone IND AS Financial Statements of BinaniIndustries Limited ("the Company") which comprise the Balance sheet as atMarch 31 2021 the Statement of Profit and Loss including the statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas the "Standalone IND AS Financial Statements").

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 section in our report the aforesaid Standalone IND AS FinancialStatements give the information required by the Companies Act 2013 as amended ("theAct") 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 2021 its loss including other comprehensive loss its cash flows and thechanges in equity for the year ended on that date.

Basis for Qualified Opinion

We conducted our audit of Standalone IND AS Financial Statements in accordance with theStandards on Auditing ("SAs") specified under Section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Standalone IND AS Financial Statements' section ofour report. We are independent of the Company in accordance with the 'Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the Standalone IND AS Financial Statements.

1. The Company has given corporate guarantees aggregating to Rs. 20395.84 lakhs as atMarch 31 2021 to banks and financial institutions on behalf of various subsidiaries. TheCompany has determined the loss allowances to the extent of Rs. 2149.10 Lakhs as at March31 2021 in respect of these corporate guarantees as required by Ind AS 109 - 'FinancialInstruments'(refer note 36{II)as of the Standalone IND AS Financial Statements).

2. Edayar Zinc Limited (EZL) a wholly owned subsidiary has entered into an One TimeSettlement OTS) dated August 28 2019 with Punjab National Bank (PNB). The payment towardsthe OTS is required to be made from the sale proceeds of the assets mortgaged with theBanks. Accordingly National Court Law Tribunal ("NCLT") Kolkata Bench Kolkatavide order dated December 04 2019 has permitted the withdrawal of the application filedby PNB under Section 7 of the IBC against the BIL ("the Company") and EZL (refernote 36(III) of the Standalone IND AS Financial Statements).

3. The Company has transferred the increase/decrease in fair value of all equityinvestments including investments in subsidiaries to Business Reorganisation Reserve (BRR)in accordance with the scheme of Amalgamation approved by the Hon'ble High Court atCalcutta on March 8 2014. Further in accordance with the said Scheme the Company hasoffset or (reversed) certain expenses/(income) (net) amounting to Rs. 10979.28 Lakhsagainst BRR during the year ended March 31 2021 respectively (refer note 50 of theStandalone IND AS Financial Statements).

Had the Company given effects of the above stated matters the said elements in theFinancial Statements of the Company would have been materially affected. The effects onthe Financial Statements of the failure to account for the matters above have not beendetermined.

Our auditor's report on the standalone financial statements for the year ended March31 2020 contained qualified opinion.

4. Material uncertainty related to Going Concern

Management has prepared the Standalone Ind AS Financial Statements on going concernbasis in spite of the following facts and circumstances:

1) The Company has been consistently incurring losses from business activities for theyear ended March 31 2021 and potential financial impact due to the lock-down and otherrestrictions and conditions related to the COVID - 19 pandemic situation for which adefinitive assessment of the impact in the subsequent period is highly dependent uponcircumstances as they evolve. (refer note 52 of the Standalone IND AS FinancialStatements).

2) The constant decrease in the operations of the Company.

3) The Guarantees issued by the Company on behalf of subsidiaries and other companieswith expected further losses in addition to the amounts provided upto March 31 2021.

4) Significance of the matters stated in Basis for Qualified Opinion paragraph above.

These matters including the status of the Company as at the date of this reportindicates a material uncertainty regarding Company's ability to continue as a goingconcern. While provisions have been made for asset impairment and liabilities as estimatedto be likely to occur further provisions may arise if the Company is unable to realizeits assets and discharge its liabilities in the normal course of business.

The management is working towards finding a workable solution to resolve the financialposition by discussions with the lenders and others and to continue its business as goingconcern. Accordingly the management considers it appropriate to prepare these financialstatements on a going concern basis.

Auditor's report on the standalone Ind AS financial statements for the year ended March31 2020 also contained the above material uncertainty related to Going Concern.

Information Other than the Standalone IND AS Financial Statements and Auditor's ReportThereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe Standalone IND AS Financial Statements and our auditor's report thereon.

Our opinion on the Standalone IND AS Financial Statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone IND AS Financial Statements ourresponsibility is to read the other information and in doing so consider whether suchother information is materially inconsistent with the financial statements or ourknowledge obtained 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.

Key Audit Matters

Except for the matter described in the Basis for Qualified Opinion paragraph we havedetermined that there are no key audit matters to communicate in our report.

Responsibilities of the Management for the Standalone IND AS 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 IND AS FinancialStatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended including the Companies(Indian Accounting Standards) Amendment Rules 2019. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of 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 the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Standalone IND AS Financial Statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the Standalone IND AS 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.

Those charged with governance are also responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the Standalone IND AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the Standalone IND ASFinancial Statements as a whole are free from material misstatementwhether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone IND AS 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 Standalone IND ASFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• 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 Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness 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 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 Standalone INDAS Financial Statements including the disclosures and whether the Standalone IND ASFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the Standalone IND AS FinancialStatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the Standalone IND AS Financial Statementsmay be influenced. We consider quantitative materiality and qualitative factors in (i)planning the scope of our audit work and in evaluating the results of our work; and (ii)to evaluate the effect of any identified misstatements in the Standalone IND AS FinancialStatements.

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 with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Financial Statementsof the current year and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when 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 (11) of section 143 ofthe Act we give in the "Annexure 1" a statement on the matters specified inparagraphs 3 and 4 of the Order.

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

a) We have sought and except for the possible effects of the matter described in theBasis for Qualified Opinion paragraph above obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our audit;

b) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen kept by the Company so far as appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss including the Statement of OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the relevant books of account;

d) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph above in our opinion the aforesaid Standalone IND AS FinancialStatements comply with the Indian Accounting Standards specified under Section 133 of theAct read with Companies (Indian Accounting Standards) Rules 2015 as amended includingthe Companies (Indian Accounting Standards) Amendment Rules 2019;

e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 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 with reference to these Standalone IND AS Financial Statementsand the operating effectiveness of such controls refer to our separate Report in"Annexure 2" to this report;

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 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. In view of the matters stated in para 1 and 2 in the Basis for Qualified Opinionparagraph we are unable to state whether Note 36 to the Standalone IND AS FinancialStatements; disclosed the impact of pending litigations on its financial position in itsStandalone IND AS Financial Statements;

ii. The company did not have Long term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

3. With respect to the matters to be included in the Auditor's Report in accordancewith the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the current yearis in accordance with the provisions of section 197 of the Act.

Annexure 1

To the Independent Auditor's Report of Even Date on the Standalone IND AS FinancialStatements of Binani Industries Limited

[Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'in the Independent Auditors' Report]

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

(b) Fixed assets have been physically verified by the management during the year inaccordance with regular program of verification which in our opinion is reasonablehaving regard to the size of the company and the nature of its assets. No materialdiscrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

ii. According to the information and explanation provided to us by the managementCompany's business does not involve inventories and accordingly the requirements underparagraph 3(ii) of the Order are not applicable to the Company.

iii The Company has granted loans & advances secured or unsecured to a companycovered in the register maintained under section 189 of the Companies Act 2013

a) According to the information and explanations given to us and on the basis of ourexamination of the records of the company the rate of interest and other terms andconditions on which the loan have been granted to one of the Company listed in theregister maintained under section 189 of the Act (total amount outstanding as at Balancesheet date Rs. 361.94 Lakhs) are not prima facie prejudicial to the interest of theCompany.

b) In case of the loans granted to the companies listed in the register maintainedunder section 189 of the Act schedule of repayment of principal have not been stipulated.Hence clause (iii)(b) and (c) of the order are not commented on.

iv. In our opinion and according to the information and explanations given to usduring the year the company has given loan to one party covered under section 186 of theCompanies Act 2013 at NIL rate of interest. Details for non-compliance are:

Particulars Name of the party Amount involved (Rs. in Lakhs) Balance as at Balance sheet date ( Rs. in Lakhs)
Loan given at a rate of interest lower than prescribed EdayarZinc Ltd 3.99 435.46

v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the meaning of Sections 7374 75 and 76 of the Act and the rules framed there under. Accordingly the provisionsstated in clause (v) of the Order are not applicable to the Company.

vi. The provisions of sub-section (1) of section 148 of the Act are not applicable tothe Company as the Central Government of India has not specified the maintenance of costrecords for any of the products of the Company. Accordingly the provisions stated inparagraph 3 (vi) of the Order are not applicable to the Company.

vii. (a) The company is generally regular in depositing undisputed statutory duesincluding provident fund profession tax income tax goods and service tax and othermaterial statutory dues as applicable to it except delay in few cases with the appropriateauthority.

(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund profession tax income tax goods and service taxand other statutory dues were outstanding as at March 312021 for a period of more thansix months from the date they became payable.

(c) According to the information and explanations given to us and examination ofrecords of the Company there are no material dues of income tax value added tax or cessthat have not been deposited on account of any dispute except in cases which aredescribed below:-

Name of the statute Nature of the Dues Amount (Rs. in Lakhs) Period to which the amount relates Forum where dispute is pending
Income Tax Act1961 Income Tax Matters 32.10 FY 2009-10 CIT (A)
Gujrat Value Added Tax 2003 Value Added tax (VAT) 146.73 FY 2013-14 CIT (A)

viii. According to the information and explanations given to us and based on therecords of the Company examined by us the Company has not accepted any loans orborrowings from any Financial Institution Bank or Government hence paragraph 3 (viii) ofthe Order is not applicable. The Company has not issued any debentures and hence there areno dues to debenture holders during the year under report.

ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans were applied for the purpose forwhich those were raised during the year.

x. According to the information and explanations provided by the management and duringthe course of our examination of the books and records of the company carried out inaccordance with generally accepted auditing practices in India and according to theexplanations and information given to us we neither come across any instance of fraud bythe company or any instance of fraud in the company by its officers/ employees has beennoticed or reported during the year nor have we been informed of such case by themanagement.

xi. According to the information and explanations given to us and based on our recordsof the examination of the company the company has paid / provided for managerialremuneration in accordance with requisite approvals mandated by the provisions of section197 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 transaction with the related parties are incompliance with section 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the IND AS financial statements as required by theapplicable Indian accounting standard.

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. Accordingly the provisions stated in paragraph 3 (xiv) of the Order are notapplicable to the Company.

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 and accordingly the provisions stated in paragraph clause 3 (xvi)of the Order are not applicable to the Company.

Annexure 2

To the Independent Auditor's Report of Even Date on the Standalone IND AS FinancialStatements of Binani Industries Limited

[Referred to in paragraph '2(f)' under 'Report on Other Legal and RegulatoryRequirements' in 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 with reference to financial statementsof Binani Industries Limited ("the Company") as of March 31 2021 in conjunctionwith our audit of the standalone Ind AS financial statements of the Company for the yearended 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 with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI) (the"Guidance Note"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to financial statements 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 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.

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 with reference to financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A Company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial control withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Qualified Opinion

As described in Basis for Qualified Opinion paragraph of our main report the Companyhas not established adequate internal financial controls and material weakness existedwith respect to matters stated therein.

A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control with reference to financial statements such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.

In our opinion except for the possible effects of the matters described in the Basisfor Qualified Opinion paragraph of main report and in view of possible effects of thematerial weaknesses described above on the achievement of the objectives of the controlcriteria the Company has maintained internal financial controls with reference tofinancial statements and such internal financial controls with reference to financialstatements were not operating effectively as of March 312021 based on the internalcontrol with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in Guidance Note.

We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the standalone IndAS financial statements of the Company for the year ended March 31 2021 and thesematerial weaknesses have inter - alia affected our opinion on the standalone Ind ASfinancial statements of the Company and we have issued qualified opinion on the StandaloneInd AS financial statements.

For V. P. Thacker & Co.
Chartered Accountants
Firm Registration No. 118696W
Abuali Darukhanawala
Partner
Membership No. 108053
UDIN: 21108053AAAAOU8830
Place: Mumbai
Date: June 30 2021

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