To the Members of BMW INDUSTRIES LIMITED
Report on the Standalone Financial Statements Opinion
We have audited the accompanying standalone Financial Statements of BMW IndustriesLimited ("the Company") which comprise the Balance Sheet as at March 31 2019and the Statement of Profit and Loss (including O ther Comprehensive Income) Statement ofChanges in Equity and Statement of Cash Flows for the year then ended and Notes to theStandalone Financial Statements including a summary of significant accounting policiesand Other Explanatory Notes for the year ended on that date (hereinafter referred to as"Standalone Financial Statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the "Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies I( ndian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 and its profit the changesin equity and its cash flows for the year ended on that date.
Key audit Matters Trade Receivables
Gross Trade Receivable of the Company is Rs.19439.77 Lakhs as on 31st March 2019. Thisincludes significant amounts which have fallen due for payment and are lying outstandingfor a considerable period of time. (Note No. 8 of the Standalone Financial Statements) Theincreasing challenges over the economy and operating environment in the steel industryhave increased the risks of default against receivables from the customers. The Company isexposed to potential risk of financial loss when the customers fail to meet theircontractual obligations.
The recoverable amount was estimated by management based on recoverability assessmentof recoverability on case to case basis and required significant audit attention. TheCompany evaluates whether there is any objective evidence that trade receivables areimpaired and determines the amount of impairment allowance as a result of the inability ofthe customers to make required payments. The Company bases the estimates on the ageing ofthe trade receivables credit worthiness of the parties and historical write-offexperience.
Basis For Opinion
We conducted our audit of the standalone 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'sResponsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence obtained by us is sufficient and appropriate to provide a basisfor our audit opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters for incorporation in our report.
Addressing the Key Audit Matters
Our audit procedures based on which we arrived at the conclusion regarding the carryingamount of Trade Receivables include the following:
We obtained an understanding from the Management assessed and tested the design andoperating effectiveness of the Company's key controls over the recoveries against theoutstanding amounts and resultant impairment assessment of material Trade Receivables;
We reviewed Management's assessment and evaluation on the credit worthiness of themajor trade receivables and historical trends and current dealing with the customers;
Assessed the recoverability of the unsettled receivables on a sample basis through ourevaluation of management's assessment keeping in view the credit profile of the customershistorical payment pattern of customers publicly available information and latestcorrespondence with customers and to consider if any provision should be made;
Tested settlement of trade receivables subsequent to the balance sheet date on a samplebasis; and
We further discussed with the Management the adequacy of the allowance for impairmentas recognised and reviewed the supporting documents provided in relation to the same.
|Key audit Matters ||Addressing the Key Audit Matters |
|Inventory determination and Valuation As at 31st March 2019 the Company has Rs.21089.53 Lakhs of Inventories (Note No. 7 of the Standalone Financial Statements). Given the size of the Inventory relative to the total assets of the Company and the estimates and judgements described below the determination and valuation of Inventory required significant audit attention. Given the nature of Industry and volume of inventory and physical verification being undertaken in phases not covering all the locations determination thereof in absence of specific identification batches etc has largely been arrived on theoretical basis considering cross-sectional weight including for the locations not covered for verifications. Moreover certain materials are lying in heaps and / or are suspectable to obsolescence and deterioration in quality. All these requires specific procedures based on technical experience for arriving at the ground stock of usable / saleable inventory. The result of these procedures may not always be accurate and involves significant management judgement and estimation. As disclosed in Note 1(C) (k) Inventories are held at lower of cost or Net Realizable Value determined using the First in First Out/ Weighted Average cost method. At year end valuation of Inventories is reviewed by the management and the cost of Inventory is reduced in cases where the Net Realizable value is lower. Management reviews the Ageing reports together with historical trends to estimate the likely future saleability of slow moving and older inventory items and performed a line-by-line analysis to ensure that it is stated at the lower of cost or net realizable value. ||Our audit procedures based on which we arrived at the conclusion regarding the carrying amount of Inventories include the following: Witnessed the year end Physical Verification carried at production units by the management and physically verified the sample drawn for this purpose. Reviewed the procedures and documentation with respect to the verification carried out by the management Obtained the reports of the verification carried during the year at different locations by the independent agencies and reviewed the outcome thereof. Reviewed the ageing report used by the management by agreeing a sample of aged inventory items; On a sample basis we verified the net realizable value of inventory items to recent realizable value; and enquiring management personnel including those outside of finance function were made and the results of our testing as given above were considered to determine the inventory and the valuation thereof. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's Report including Annexuresto Director's Report Management Discussion and Analysis Report Business ResponsibilityReport and Report on Corporate Governance but does not include the consolidated financialstatements standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our 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 have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 state of affairs (financial position) Profit orLoss (financial performance including other comprehensive income) Changes in Equity andCash Flows of the Company in accordance with the accounting principles generally acceptedin India including the Indian Accounting Standards specified under section 133 of theAct. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the companyand for preventing and detecting 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 controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due 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.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditors' Responsibility for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the StandaloneFinancial Statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors' report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith Standard on Auditing (SAs) will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these Standalone 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 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 intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial 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 system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone 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 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 period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or 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
I. As required by the Companies (Auditor's Report) Order 2016
("the Order") issued by the Central Government of India in terms ofsub-section (11) of Section 143 of the Act we give in the "Annexure A" astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
II. As required by Section 143(3) of the Act we report that: a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit. b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books. c) The Balance Sheet the Statement of Profit and Lossincluding Other Comprehensive Income the Statement of Changes in Equity and the Statementof Cash Flow dealt with by this Report are in agreement with the relevant books ofaccount. d) in our opinion the aforesaid Standalone financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended; e) On the basis of thewritten representations received from the directors as on March 31 2019 taken on recordby the Board of Directors none of the directors are disqualified as on March 31 2019from being appointed as a director in terms of Section 164(2) of the Act. f ) With respectto the adequacy of the internal financial controls with reference to Standalone financialstatements of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal control with referenceto financial statements; and g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014 as amended in our opinion and to the best of our information and according to theexplanations given to us: I. The Company has disclosed the impact of pending litigationson its financial position in its standalone financial statements.
II. The Company did not have any long-term contracts including derivative contractsfor which 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.
III. With respect to the reporting under Section 197 (16) of the Act to be included inthe Auditors' Report in our opinion and according to the information and explanationsgiven to us the Remuneration (including Sitting fees) paid by the Company to itsDirectors during the current year is in accordance with the provisions of Section 197 ofthe Act and is not in excess of the limit laid down therein.
For Lodha & Co.
Chartered Accountants Firm's ICAI Registration No.:301051E
H K Verma
Place: Kolkata Partner Date: May 30 2019 Membership No: 055104
Annexure "A" to the Independent Auditor's Report
The Statement referred to in paragraph (i) with the heading Report on other legaland regulatory requirements' of our Report of even date to the members of BMW IndustriesLimited on the Standalone financial statements of the Company for the year ended 31stMarch 2019 we report that: i) a. The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets. b. The fixedassets of the Company were physically verified by the management in accordance with aregular programme of verification in a phased manner over a period of three years which inour opinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme certain fixed assets were physically verified by themanagement during the year. According to the information and explanations given to us nomaterial discrepancies were noticed on such verification. c. Based on verification oftitle deeds/lease deeds produced to us by the management and according to the informationand explanations given to us in our opinion the title deeds/lease deeds of immovableproperties are held in the name of the company. ii) As explained to us inventories exceptscrap have been physically verified during the year at reasonable intervals by themanagement and also by independent agencies undertaking such verifications. As far asascertained discrepancies noticed on verification between the physical stocks and thebook records were not material and the same has been properly dealt with in the books ofaccount. iii) According to the information and explanations given to us the Company hasgranted unsecured loans to subsidiary companies which are covered in the registermaintained under Section 189 of the Act.
In respect of the loans so granted by the Company there were no stipulations withrespect to repayment of principal amount. As stated these are repayable on demand. Loangiven to one of the subsidiary being strategic in nature and to provide the
financial support to the subsidiary company interest has been waived during the year.
As informed to us having regard to above there are no overdue amounts outstanding inrespect of such loans and interest thereon where applicable and the terms and conditionsthereof as such prima facie are not prejudicial to the interest of the Company. iv) Inour opinion and according to the information and explanations given to us the Company hascomplied with the provisions of section 185 and 186 of the Act in respect of grant ofloans making investments and providing guarantees and securities as applicable. v) TheCompany has not accepted any deposits. Consequently the directives issued by the ReserveBank of India and the provisions of sections 73 to 76 or any other relevant provisions ofthe Companies Act and the rules framed there under are not applicable to the Company. vi)We have broadly reviewed the books of account maintained by the company pursuant to theRules made by the Central Government for the maintenance of cost records under Section 148(1) of the Act in respect of the Company's products to which the said rules are madeapplicable and are of the opinion that prima facie the prescribed records have beenmaintained. We have however not made a detailed examination of the said records with aview to determine whether they are accurate or complete. vii) a. According to theinformation and explanations given to us during the year the Company has generally beenregular in depositing undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax Goods and Services tax customs dutyexcise duty value added tax cess and any other material statutory dues as applicable toit with the appropriate authorities. However according to the information andexplanations given to us there is no undisputed amounts payable in respect of these whichwere in arrears as on March 31 2019 for a period of more than six months from the datethey became payable.
b. According to the information and explanations given to us the details of disputeddues of income tax sales tax service tax custom duty excise duty and Value added Taxas at March 31 2019 not deposited on account of any dispute are as follows:
|Name of the statue ||Nature of dues ||Rupees in Lakhs ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax Demands ||163.55 ||F.Y. 2012 2013 ||Commissioner of income tax (Appeals) |
|Income Tax Act 1961 ||Income Tax Demands ||14.79 ||F.Y. 2013 2014 ||Commissioner of income tax (Appeals) |
|Central Sales Tax Act 1956 ||Central Sales Tax ||115.52 ||F.Y. 2012-2013 ||Joint Commissioner of Commercial Taxes (Appeals) |
viii) In our opinion and on the basis of information and explanations given to us bythe management the Company has not defaulted in repayment of dues to banks and others. Asexplained the company does not have any loan or borrowings from any financialinstitution governments or any dues to debenture holders. ix) The Company did not raiseany money by way of initial public offer or further public offer (including debtinstruments). In our opinion and according to the information and explanations given tous the term loans have been applied for the purpose for which they were raised. x) Duringthe course of our examination of books of account carried out in accordance with generallyaccepted auditing practices in India we have neither come across any incidence of fraudby the Company or on the Company by its officers or employees nor have we been informed ofany such cases by the management. xi) According to the information and explanations givento us and based on our examination of the records of the Company the Company haspaid/provided for managerial remuneration in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V of the Act. xii) In ouropinion and according to the information and explanations given to us the Company is nota Nidhi company. Accordingly paragraph 3(xii) of the Order is not applicable. xiii)According to the information and explanations given to us and based on our examination ofthe records of the Company transactions with the related parties are in compliance withsections 177 and 188 of the Act where applicable and details of such transactions havebeen disclosed in the Standalone financial statements as required by the applicable Indianaccounting standards. xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly paragraph 3(xiv) of the Order is not applicable.xv) According to the information and explanations given to us and based on our examinationof the records of the Company the Company has not entered into non-cash transactions withdirectors or persons connected with them. Accordingly paragraph 3(xv) of the Order is notapplicable. xvi) According to the information and explanations given to us the Company isnot required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
For Lodha & Co.
Chartered Accountants Firm's ICAI Registration No.:301051E
H K Verma
Place: Kolkata Partner Date: May 30 2019 Membership No: 055104
Annexure "B" to the Independent Auditor's Report
(Referred to in paragraph ii (f) under Report on Other Legal and RegulatoryRequirements' of our report of even date)
Report on the Internal Financial Controls with reference to Standalone financialstatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013("the Act").
We have audited the internal financial controls with reference to the Standalonefinancial statements of BMW Industries Limited ("the Company") as at March 312019 in conjunction with our audit of the Standalone financial statements of the Companyfor 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 financial controls with reference to Standalonefinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting (the "Guidance Note") issued by the Instituteof Chartered Accountants of India. These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to Standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note issued by the Institute ofChartered Accountants of India and the Standards on Auditing prescribed under Section143(10) of the Act to the extent applicable to an audit of internal financial controlswith reference to the financial statements. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial control with reference toStandalone financial statements were 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 with reference to Standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference toStandalone financial statements included obtaining an understanding of such internalfinancial controls with reference to Standalone financial statements assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditors' judgement including the assessment of the risks of materialmisstatement of the Standalone 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 audit opinion on the Company's internal financial controls withreference to Standalone financial statements.
Meaning of Internal Financial Controls with reference to financial statements
A Company's internal financial control with reference to Standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of Standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A Company's internalfinancial control with reference to Standalone financial statements includes thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the transactions and dispositions of the assets ofthe Company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of Standalone financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorisations of management and directors of theCompany; 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 Standalone financial statements.
Inherent Limitations of Internal Financial Controls with reference to Standalonefinancial statements
Because of the inherent limitations of internal financial controls with reference toStandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to Standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to Standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlswith reference to Standalone financial statements and such internal financial controlswith reference to Standalone financial statements were operating effectively as at March31 2019 based on the internal financial controls with reference to Standalone financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note issued by the Institute of CharteredAccountants of India.
For Lodha & Co.
Chartered Accountants Firm's ICAI Registration No.:301051E
H K Verma
Place: Kolkata Partner Date: May 30 2019 Membership No: 055104