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P B A Infrastructure Ltd.

BSE: 532676 Sector: Infrastructure
NSE: PBAINFRA ISIN Code: INE160H01019
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OPEN 5.43
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VOLUME 200
52-Week high 16.75
52-Week low 5.43
P/E
Mkt Cap.(Rs cr) 7
Buy Price 5.43
Buy Qty 2000.00
Sell Price 6.30
Sell Qty 600.00
OPEN 5.43
CLOSE 5.43
VOLUME 200
52-Week high 16.75
52-Week low 5.43
P/E
Mkt Cap.(Rs cr) 7
Buy Price 5.43
Buy Qty 2000.00
Sell Price 6.30
Sell Qty 600.00

P B A Infrastructure Ltd. (PBAINFRA) - Auditors Report

Company auditors report

INDEPENDENT AUDITOR’S REPORT

To the Members of

M/s PBA Infrastructure Limited

CIN: L45200MH1974PLC017653 611/3 V.N. Purav Marg Chembur (East) Mumbai 400071Maharashtra

Report on the Financial Statements

We have audited the accompanying financial statements of M/s. PBA InfrastructureLimited ("the Company") which comprise the Balance Sheet as at March 31 2018the Statement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information.

Management’s Responsibility for the 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 preparationand presentation of these financial statements that give a true and fair view of the stateof affairs(financial position) profit and loss (financial performance including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (‘Ind AS’) specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

Auditor’s Responsibility

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 the 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. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of theaccounting estimates made by the Company’s Directors as well as evaluating theoverall 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.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India including Ind AS specified under Section 133 of theAct of the state of affairs (financial position) of the Company as at 31 March 2018 itsLoss (financial performance including other comprehensive income) its cash flows and thechanges in equity for the year ended on that date except for the matters specified inEmphasis of Matter Paragraph.

Emphasis of Matters

Attention is invited to

a) Note No. A-11 & A-21 Loan Statements pertaining to certain loans from somebanks & financial institutions have not been received and reconciled.

Further due to pending clarifications & Confirmations from some banks andfinancial institutions for certain current/cash credit/term loan accounts entries have notbeen reconciled. Hence to that effect in any of such pending reconciliation offinancial statements remain unascertained. As per one of the Consortium Bank Karur VyasaBank Ltd Long Term Loan Account as per the Bank Statement shows and outstanding debitbalance of Rs.16.11 crores whereas the Company is showing a Debit Balance of Rs. 6.44crores in its Books. Lead bank under consortium has taken symbolic possession of thevarious secured assets against total consortium overdue debt of Rs. 315.96 crores underSecuritization and Reconstruction of Financial Assets and Enforcement of Security InterestAct 2002. The Company has offered One Time Settlement with the Banks for an aggregateamount of Rs.115 crores on 30th December 2017 hence interest on these loans isprovided upto December 2017.

b) Note No. A-11 & A-21 Company has erroneously not provided for interest on bankborrowings from Union Bank of India and IDBI Bank in the last financial year i.e. FY2016-17. The same amounting to Rs. 2.49 cr has been provided as prior period item in thecurrent year thereby resulting into escalation of finance costs.

c) Note No. A-11 Company has defaulted in repayment of its Public Deposits and InterCorporate Deposits on maturity and payment of interest thereon.

d) Some Suppliers and Creditors have initiated legal proceedings against the Companywhich may result in Compensation/ Interest & Penalties. The possible impact of thesame on the financial results cannot be ascertained pending such outcome.

e) Company has not been maintaining proper records for fixed assets showing fullparticulars including quantitative details and situation of property; plant andequipment. Company does not have a regular program of physical verification of its fixedassets by which they are verified in a phased manner.

f) Note No. A-1 Company has erroneously not provided Depreciation during the previous2 years as per the requirement of Schedule II of the Companies Act 2013. In the CurrentYear the said error has been rectified.

g) As per the requirement Section 149(1) of Companies Act 2013 every listed company isrequired to have on its Board of Directors not less than 1/3rd directors asindependent directors. The Company had complied with the said requirement until FY2015-16. However from FY 2016-17 the said requirement has not been complied with.

h) As per the requirement Section 138 of the Companies Act 2013 every listed companyis required to appoint an Internal Auditor. The Company has not complied with theprovisions of the said section since the commencement of the Companies Act 2013 in viewof the extended losses.

i) Note No. A-8 The Company follows accounting practice of recognizing revenue underIndAS-11 on the basis percentage completion method. The Company being an EPC contractorraises claims / arbitration money with employers/Customers for the delay on obtainingapprovals cost escalation etc. As per Company policy though the claims are raised forthe actual loss incurred by the Company the same is recognized in the books at realizablevalue which is determined by the internal team of the Company. Though these claims arenot acknowledged by the employer / Customer the same being intangible in nature is beingclassified as Work-in-progress. The said claims amounting to Rs.12565.13 lakhs thoughclassified under WIP (Current Asset) are not recoverable in the near future.

j) Due to aforesaid reasons the existence of a material uncertainty that may castapprehension about the Company’s ability to function as a going concern.

However the financial statements of the Company have been prepared on a going concernbasis & do not include any adjustments that might result from the outcome of thisuncertainty.

Our opinion is qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of section 143 (11) of theAct we give in the "Annexure A" a statement on the matters specified in theparagraph 3 and 4 of the Order to the extent applicable.

Further to our comments in Annexure A as required by Section 143(3) of the Act wereport 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 of the aforesaidfinancial statements;

b. Except for the possible effect of the matters described in the ‘Emphasis ofMatter’ paragraph above in our opinion proper books of account as required by lawhave been kept by the Company so far as it appears from our examination of those books;

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

d. Except for possible effect of the matters described in the ‘Emphasis ofMatter’ paragraph above in our opinion the aforesaid Ind-AS financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withCompanies (Indian Accounting Standards) Rules 2015 as amended

e. On the basis of written representations received from the Directors as on 31stMarch 2018 taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2018 from being appointed as a director in termsof Section 164(2) of the Act; and

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" to this report.

g. With respect to the other matters to be included in the Auditor’s Report inaccordance with the Rule 11 of Companies (Audit and Auditors) Rules 2014 (as amended) inour opinion and to the best of our information and according to the explanation given tous:

• The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note No.A-25 to the financial statements;

• Company did not have any Long term contract including derivatives contract assuch the question of commenting on any material foreseeable losses thereon does not arise.

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

For R V Luharuka & Co LLP
Chartered Accountants
FRN No. 105662W / W100174R
Ramesh Luharuka
Place: Mumbai Partner
Dated: 30th May 2018 Membership No: 031765

ANNEXURE - A TO THE INDEPENDENT AUDITORS’ REPORT

Referred to in Paragraph 1 under the heading ‘Report on Other Legal &Regulatory Requirements’ of our report of even date to the financial statement of theCompany for the year ended March 31 2018 we report that: i. In respect of theCompany’s fixed assets a. Company has not been maintaining proper records showingfull particulars including quantitative details and situation of property; plant andequipment. b. Company does not have a regular program of physical verification of itsfixed assets by which fixed assets are verified in a phased manner.

In accordance certain fixed assets wherein projects have been completed are notidentifiable; hence discrepancies exist. In our opinions this periodicity of physicalverification needs to be reasonable having regard to the size of the Company and thenature of its assets.

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. In respect of the Company’s Inventory a. As explained to us the inventorieshave been physically verified during the year by the management. In our opinion havingregard to the nature and location of stocks the frequency of the physical verification isreasonable. b. Company follows accounting practice of recognizing revenue under Ind AS-11on the basis percentage completion method. The Company being an EPC contractor raisesclaims / arbitration money with employers/ Customers with regard to delay on obtainingapprovals cost escalation etc. As per Company policy though the claim may be raised forthe actual loss incurred by the Company on account of delay with respect to theemployer/customer the same is recognized in the books depending upon the realizable valueof the same which is determined by the internal team of the Company. Though these claimsare not acknowledged by the employer / debtor the same being intangible in nature isbeing classified as WIP by the Company. As on 31st March 2018 WIP includesclaims of Rs.12565.13 lakhs

iii. Company has not granted any loan secured or unsecured to bodies corporate coveredin the register maintained under section 189 of the Companies Act2013 (‘theAct’). Accordingly the provisions of Clauses 3(iii)(a) 3(iii)(b) and 3(iii)(c) ofthe order are not applicable. iv. In our opinion and according to the information andexplanations given to us the company has complied with the provisions of section 185 and186 of the Companies Act 2013 in respect of loans investments guarantees and security.

v. Company has accepted deposits from the public.

Company has generally complied with the provisions of directives issued by Reserve Bankof India and the provisions of Section 73 to 76 of the Companies

Act 2013 and rules framed there under except filing of Return of Deposit with Registrarof Companies and default in payment of Interest and principal on maturity. As per theinformation and explanation given to us no order under the aforesaid sections have beenpassed by the Company Law Board National Company Law Tribunal or Reserve Bank of Indiaor any Court or any other tribunal on the Company. Presently Company has been makinginterest and principal payment towards public deposits to individuals who have initiatedlegal action. vi. We have broadly reviewed the books of accounts maintained by the Companypursuant to the Companies (Cost records and audit) Rules 2014 and as prescribed by theCentral Government under section 148(1) of the Act and are of the opinion thatprima-facie the prescribed accounts and cost records have been made and maintained by theCompany. We have not however made a detailed examination of the cost records with a viewto determining whether they are accurate or complete. vii. According to the informationand explanations given to us:

Undisputed amounts payable in respect of provident fund income tax sales tax wealthtax service tax duty of excise duty of customs Value Added Tax Goods & ServiceTax cess have generally been regularly deposited to the appropriate authorities exceptfor the following which were in arrears as at 31st March 2018 for a period ofmore than six months from the date they became payable:-

Particulars Amount (In Lakhs)
Tax Deducted at Source 540.44
Provident Fund 6.02
Service Tax 53.09
Entry Tax 4.53

a. There are no material dues of wealth tax duty of customs and cess which have notbeen deposited with the appropriate authorities on account of any dispute. However thefollowing dues of income tax sales tax service tax and value added tax have beendisputed by the Company:-

Statement of Disputed Dues
Name of the Statute Nature of dues Amount (In Lakhs) Forum where dispute is pending
MVAT Act Tax & Penalty 4041.53 Appellate Authority VAT Mumbai
Income Tax Tax 83.14 CIT (A) Mumbai

a. In our opinion and according to the information and explanations given to us theCompany has defaulted in the repayment of dues to financial institutions and banks. Thedetails of such default are given below. There are no loans or borrowings payable toGovernment and debenture holders

Long Term Borrowings:
(Amount in Rs.)
Name of Bank Total Default Amount (including Principal and Interest) Continuing Default Period
1 Royal Bank of Scotland 970000 Sep-12
2 Srei Equipment Finance Ltd 1417027 April-14
3 Shriram Equipment Finance Ltd 21899393 Since Jan-14

 

Short Term Borrowings
(Amount in Rs.)
Name of Bank Total Default Amount (including Principal and Interest) Continuing Default Period
1 Canara Bank –LTL-1(CDR) 334006784 Since April 13
2 Canara Bank –CC 916896391 Since June 2013
3 Canara Bank FITL 61160587 Since April 2013
4 Canara Bank –LTL-II (CDR) 430525168 Since April 2013
5 Canara Bank-BG Invoked 712012654 Since July 2013
6 Canara Bank-EMD 152981004 Since April 2013
7 IDBI Bank Ltd 86347319 Since Feb 2013
8 Karur Vysya Bank –FITL 3504739 Since Dec 14
9 Karur Vysya Bank-CC 136841773 Since Nove 2014
10 Karur Vysya Bank-CDR 64454164 Since Oct 14
11 Punjab & Sind Bank -CC 197815748 Since Sept 2015
12 State Bank of Patiala –FITL 3460643 Since June14
13 State Bank of Patiala-BG 116013986 Since Sept 2017
14 State Bank of Patiala-CC 148541444 Since Jan 2014
15 State Bank of Patiala-CDR 48640729 Since June14
16 Union Bank –FITL-I 4899361 Since March14
17 Union Bank –FITL-II 770053 Since April 14
18 Union Bank –LTL-I (CDR) 72781487 Since Oct13
19 Union Bank –LTL-II (CDR) 11311470 Since July 13
20 Union Bank of India -EMD 22710816 Since April 2013
21 Union Bank of India -OD 198335200 Since March 2014
22 Union Bank of India-BG Invoked 193588568 Since March 2014
23 Union Bank of India–CC 17725991 Since Jan 2014

viii. According to the information and explanations given to us the Company has notraised moneys by way of initial public offer or further public offer including debtinstruments. Accordingly the provisions of clause 3 (ix) of the Order are not applicableto the Company and hence not commented upon.

ix. Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.

x. According to the information and explanations given to us the managerialremuneration has been paid / provided in accordance with the requisite approvals mandatedby the provisions of section 197 read with Schedule V to the Companies Act 2013

xi. In our opinionand according to the information and explanations given to us theCompany is not a Nidhi Company. Therefore the provisions of clause 3 (xii) of the Orderare not applicable to the Company and hence not commented upon.

xii. In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theNotes to Financial Statements as required by the applicable accounting standards.

xiii. According to the information and explanations given by the management theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year under review. Accordingly the provisions ofclause 3 (xiv) of the Order are not applicable to the Company and hence not commentedupon.

xiv. According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim. Accordingly the provisions of clause 3 (xv) of the Order are not applicable to theCompany and hence not commented upon.

xv. In our opinion and according to the information given to us the company is notrequired to be registered under section 45-1A of the Reserve Bank of India Act 1934 andaccordingly the provisions of clause 3 (xvi) of the Order are not applicable to theCompany and hence not commented upon.

For R V Luharuka & Co LLP
Chartered Accountants
FRN No. 105662W / W100174R
Ramesh Luharuka
Place: Mumbai Partner
Dated: 30th May 2018 Membership No: 031765

ANNEXURE - B TO THE INDEPENDENT AUDITORS’ REPORT

[Referred to in paragraph 2(g) under the heading ‘Report on Other Legal &Regulatory Requirement’ of our report of even date to the financial statements of theCompany for the year ended March 31 2018.]

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of M/s. PBAInfrastructure Limited ("the Company") as of March 31 2018 in conjunction withour audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

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’). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company’s policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor’s judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

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 controlssystem over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

Company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail 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 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 Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For R V Luharuka & Co LLP
Chartered Accountants
FRN No. 105662W / W100174R
Ramesh Luharuka
Place: Mumbai Partner
Dated: 30th May 2018 Membership No: 031765