|BSE: 533276||Sector: Infrastructure|
|NSE: BSLIMITED||ISIN Code: INE043K01029|
|BSE 00:00 | 26 Nov||BS Ltd|
|NSE 05:30 | 01 Jan||BS Ltd|
|BSE: 533276||Sector: Infrastructure|
|NSE: BSLIMITED||ISIN Code: INE043K01029|
|BSE 00:00 | 26 Nov||BS Ltd|
|NSE 05:30 | 01 Jan||BS Ltd|
To the Members of M/s BS LIMITED
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying Standalone Ind AS Financial Statements of M/sBS LIMITED ("the Company") which comprise the Balance Sheet as at March31 2018 the
Statement of Profit and Loss (including other comprehensive income) the statement ofCash Flows and the statement of changes in equity for the year then ended and a summary ofsignificant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (the act') with respect to the preparation ofthese standalone Ind AS Financial Statements that give a true and fair view of the stateof affairs financial position financial performance including other comprehensiveincome cash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards (Ind AS)specified under Section 133 of the Act read with relevant rules issued there under.
This responsibility includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; design implementation and maintenance of adequate internal financial controlsthat are operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the Standalone Ind ASFinancial 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 Standalone Ind AS FinancialStatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions 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. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe Standalone Ind AS Financial Statements are free from material misstatement. doubt onAn audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the Standalone Ind AS Financial Statements. The procedures selected dependon the auditor's judgment including the assessment of the risks of material misstatementof the Standalone Ind AS Financial Statements whether due to fraud or error. In makingthose risk assessments the auditor considers internal financial control relevant to theCompany's preparation of the Standalone Ind AS Financial Statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstances.An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the Standalone Ind AS Financial Statements. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Standalone Ind AS Financial Statements:
Basis for Qualified Opinion:
a) The Company has defaulted in repayment of dues to Banks/Financial Institutionsduring the current financial year. All loans outstanding were classified as NPA by thebanks during the preceding financial year. Provision for interest (excluding penalinterest) amounting to Rs. 169.67 Cr. and Rs. 28.60 Cr. on its Working Capital Loan andTerm Loan respectively has not been made in the books by the Company as those LoanAccounts were classified as NPA by the Lending Banks and Financial Institutions. The lossof the Company has been understated by Rs.198.27 Cr. in view of non provision of Interestamount. If the accrued interest on outstanding bank facilities debited to P&L accountthen the company will incur loss of Rs. 997.98 Cr. (Refer Note No.29 & 30).
b) The Company is not regular in payment of undisputed statutory dues during thecurrent financial year amounting to Rs. 102044204 which includes TDS TCS DividendDistribution Tax Service Tax Provident Fund Employees State Insurance and ProfessionalTax.
c) Since the Company has not obtained any technical/ market/commercial evaluation forthe inventory we are unable to comment on the realizable value of the same which may belower than the amount at which it has been reflected in the balance sheet.
d) In absence of technical and costing evaluation of current and noncurrent assetsimpact of impairments if any on their economic value we can't comment on the realizablevalue of same.
e) The trade receivables could not be verified as confirmation of balances have notbeen received. The company has written off trade receivables amounting to Rs. 694.96Crores in the current financial year. The realisability of remaining trade receivablesamounting to Rs.500.84 Crores is in doubt and company has not made any provision for Badand Doubtful debts in respect of these receivables.
f) This situation indicates the existence of a material the uncertainty that may castsignificant Company's ability to meet its financial obligation including repayment ofvarious loans and unpaid interest and the ability to fund various obligations pertainingto operations including unpaid/overdue creditors for ensuring/ commencing normaloperations.
g) The financial statements for the FY 2015-16 were not adopted by the shareholders atthe AGM conducted on 29-12-2017. The company's ongoing petition u/s 131 of the CompaniesAct 2013 and rules prescribed there under for the Financial Year's 2014-15 and 2015-16for getting approval for revision of its financial Statements to write-off outstandingtrade receivables and Loan & Advances given by company over 2 Financial Year'saggregating to 214.16 Crores i.e. 110.55 Crores in F.Y. 2014-15 and remaining balance ofRs.103.61 Crores in F.Y. 2015-16 had been dismissed by the Honorable NCLT Hyderabad benchvide order dated 27.02.2018. Aggrieved by the above decision of NCLT the company hasfiled an appeal before Hon'ble NCLAT on 19-05-2018 which is pending as on date. (Refernote No. 46)
h) Attention is invited to note No.52 company has given bank guarantees to customersfor the contracts entered during preceding financial years. The projects were abandonedmidway due to some technical reasons and during the current financial year the customershave invoked those bank guarantees. This made the company to claim the respective invokedamounts from the customers.
i) Attention is invited to note no.48 which states that the company did not file thereturns of Income Tax for the assessment years of 2015-16 and 2016-17 and self-assessmenttax amounting to Rs. 267998355 and Rs. 353545760/- respectively were not paid andsuch status of payment will not hold good afterwards as due to account of application forrevision of financials for these two years (F.Y.2014-15 and F.Y.2015-16) by the companyunder Sec. 131 of the Companies Act 2013 and which is pending for disposal with NCLAT.
j) The company's net worth has been eroded on account of losses of the company incurrent financial year and immediately preceding financial year and the Net worth of thecompany is negative. The current liabilities of the company exceeded its current assets asat the balance sheet date by Rs. 7176425721 /-. It would cast doubt on the Company'sability to continue as a going concern basis. The financials has not been with suchadjustments for the F Y- 2017-18.
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 above the aforesaid Standalone Ind AS 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 including the IndAS of the financial position of the Company as at 31st March 2018 and its financialperformance including other comprehensive income its cash flows and changes in equity forthe year ended on that date.
Emphasis of Matters:
a) Attention is invited to note no.31 that SBI along with other banks which are inconsortium for granting loans to the company has issued notices on 14-09-2017 &20-09-2017 under section 3(4) Rule 8(1) 8(2) of SARFAESI Act advising to take symbolicpossession and later issued a notice on 07.12.2017 & 29.12.2017 under Rule 8(6) of theSecurity Interest (Enforcement) Rules under the SARFAESI Act advising for the proposedsale of the said properties which are mortgaged to banks by public E-Auction.
b) Attention is invited to note no.32 regarding the application made by State Bank ofIndia and 7 other banks with Debts Recovery Tribunal (DRT) on 13.07.2017 for recovery ofoutstanding dues to the banks from BS Limited which have become irregular and overdue. TheHon'ble DRT has passed an interim order on 21.07.2017 mentioning to the company that theyshould file the objections/Counters against the application as on 08-08-2017.
c) Attention is invited to note no.33 that the company and its promoters have beendeclared as "Willful Defaulter" by IFCI Limited one of the term lenders as perguidelines of Reserve Bank of India's Circular dated 1.7.2015.
d) Attention is invited to note no.34 regarding the show cause notice received by thecompany from State Bank of India SAM II Branch Hyderabad vide their letter No.SAMB/HYD/KSJ/1871 dated 5.3.2018 seeking company's replies as to why the company shouldnot be declared as a willful defaulter.
e) Attention is invited to note No.45 which indicates with respect to the realizationof the Outstanding Trade Receivables and the Advances given by the Company which have beenoutstanding for more than 365 days as on 31-03-2018 and that the financial statements ofthe Company did not include any adjustment relating to the certainty of the recovery ofsuch balances to the extent of Rs. 232.33 Crores.
f) Attention is invited to note no.47 regarding application made by State Bank ofIndia SAM-II Branch with National Company Law Tribunal (NCLT) Hyderabad for resolution ofcompany's bank accounts with State Bank of India and its associate banks (since mergedwith SBI w.e.f. 1.4.2017).
g) Attention is invited to note no.49 regarding suspension of trading of company'ssecurities in both Bombay Stock Exchange & National Stock Exchange for Non-Filing ofannual reports with Stock Exchanges for two years i.e. F.Y. 2015-16 & F.Y.2016-17.The SEBI has suspended trading of Company's securities w.e.f 11.05.2018.
h) Further we draw attention on Note No. 51 where in the management mentioned thatone of the major manufacturing unit of the company has not been in its operations fromOctober 2017.
Our opinion is not qualified in respect of the above matters
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 A a statement on the matters Specified in paragraphs 3and 4 of the Order.
2. As required by section 143(3) of the Act we further 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 purpose 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 Profitand Loss including Other Comprehensive Incomethe Statement of Cash Flows and the statement of changes in equity dealt with by thisReport are in agreement with the books of account;
d) in our opinion the aforesaid Standalone Ind AS Financial Statements comply with theapplicable Accounting Standards specified under Section 133 of the Act read with relevantrule issued there under.
e) On the basis of written representations received from the directors as on March 312018 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2018 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'; and
g) With respect to other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us:
i. The Company has pending litigations which would impact its financial positiondisclosed in notes to financial statements.
ii. The Company does not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
iii. There are no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the company.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
Annexure referred to in Independent Auditors Report to the Members of M/s BS LIMITED onthe Standalone Ind AS Financial Statements for the year ended 31st March 2018 we reportthat:
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) As explained to us fixed assets have been physically verified by the management atregular intervals; as informed to us no material discrepancies were noticed on suchverification. In our opinion the frequency verification is reasonable.
(c) According to the information and explanations given to us and on the basis of ourexamination of records of the Company the title deeds of immovable properties are held inthe name of the Company.
ii. (a) The Inventory has been physically verified during the year by the Managementand in our opinion the frequency of verification is not reasonable.
(b) In our opinion the procedures of the physical verification of inventory followedby the Management are not adequate in relation to the size of the Company and the natureof its business.
iii. The Company has not granted any loans secured or unsecured to companies firmsand Limited Liability partnerships or other parties covered in the register maintainedunder section 189 of the Companies Act 2013. Therefore the provisions of Clause 3(iii)(iii)(a) (iii) (b) and (iii)(c) of the said order are not applicable to the company.
iv. The Company has not granted any loans or made any Investments or provided anyguarantee or security to the parties covered under section 185 and 186 of the Act.Therefore the provisions of clause 3(iv) of the said order are not applicable to thecompany.
v. The Company has not accepted any deposits from the public covered under Section 73to 76 of the Companies Act 2013 and rules framed there under to the extent notified.
vi. We have broadly verified the books of accounts and records maintained by thecompany in respect of products where pursuant to the rules made by the central governmentof India the maintenance of cost records has been specified under the sub-section (1) ofsection 148 of the Companies Act 2013 and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have not however madedetailed examinations of the records with a view to determine whether they are accurate orcomplete.
vii. (a) According to the information and explanations given to us and based on therecords of the company examined by us the company is not regular in depositing theundisputed statutory dues except in few cases including Provident Fund Employees StateInsurance Income Tax Custom Duty Excise Duty and other material statutory dues asapplicable with the appropriate authorities in India ;
(b) There were undisputed amounts payable amounting Rs. 99261855 in respect ofProvident Fund Service Tax TDS Dividend Distribution Tax and Professional Tax inarrears as at 31st March 2018 for a period of more than 6 months from the date they becamepayable.
(c) According to the information and explanations given to us and based on the recordsof the company examined by us there are no dues of Income Tax Wealth Tax Sales TaxCustoms Duty and Excise Duty which have not been deposited on account of any disputes. Butthere is a disputed liability of Service Tax. The details are as follows:
viii. The company has defaulted in the repayment of loans taken from banks andfinancial institutions during the current financial year and no interest provision wasmade by the company on working capital loan amounting to Rs. 169.67 Crores and term loanamounting to Rs.28.60 Crores. These Loans have become NPA during the preceding financialyear.
ix. The Company has not raised any moneys by way of initial public officer furtherpublic offer (including debt instruments) and term loans during the year. Accordingly theprovisions of this clause are not applicable to the Company.
x. According to the information and explanations given to us no material fraud by thecompany or on the company by its officers or employees has been noticed or reported duringthe course of our Audit.
xi. The Company has paid/provided for managerial remuneration in accordance with therequisite approvals mandate by the provisions of section 197 read with schedule V to theCompanies Act 2013.
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it; the Provisions of clause 3(xii) of the order are not applicable to the company.
xiii. The Company has entered into transactions with related parties in compliance withthe provisions of section 188 of the Act. The details of such related party transactionshave been disclosed in the Ind AS Financial Statements as required under Indian Accountingstandard (Ind AS) 24 related party disclosures specified under section 133 of the Actread with rule 7 of the Companies (Accounts) Rules 2014.
xiv. The Company has not made any preferential allotment of private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of clause 3(xiv) of the Order are not applicable to the Company.
xv. The Company has not entered into non-cash transactions with its directors orpersons connected with him. Accordingly the provisions of clause 3(xv) of the Order arenot applicable to the Company.
xvi. 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.
Report on the Internal Financial Controls over Financial Reporting under clause (i) ofthe Sub-section 3 of the Section 143 of the Companies Act 2013 (The Act')
We have audited the internal financial controls over financial reporting of M/s BSLIMITED (the company') as of 31st march 2018 in conjunction with our audit of IND ASFinancial 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. These standards and guidance note require that we comply with ethicalrequirements and plan and performed 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 risk ofmaterial misstatement of the IND AS 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 and the company's internal financial control systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financialcontrol over financial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reporting and thepreparation of Ind AS Financial Statements for external purposes in accordance withgenerally accepted accounting principles. A Company's internal financial control overfinancial reporting includes these policies and procedures that (1) pertain to themaintenance of records that in reasonable detailed accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of Ind ASFinancial Statements in accordance with generally accepted principles and that receiptsand expenditures are being made only in accordance with authorization of management anddirectors of the Company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition use or disposition of the Company's assetsthat could have a material effect on the Ind AS Financial Statements.
Inherent Limitation of Internal Financial Controls over Financial Reporting
Because of the inherent limitation 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.
In our opinion the company does not have adequate internal financial controls systemwith respect to inventory over financial reporting and such internal financial controlsover financial reporting were not operating effectively as at March 31st 2018 based onthe internal control over financial reporting criteria established by the companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute OfChartered Accountants of India.