P B A Infrastructure Ltd.
|BSE: 532676||Sector: Infrastructure|
|NSE: PBAINFRA||ISIN Code: INE160H01019|
|BSE 00:00 | 29 Oct||P B A Infrastructure Ltd|
|NSE 05:30 | 01 Jan||P B A Infrastructure Ltd|
|BSE: 532676||Sector: Infrastructure|
|NSE: PBAINFRA||ISIN Code: INE160H01019|
|BSE 00:00 | 29 Oct||P B A Infrastructure Ltd|
|NSE 05:30 | 01 Jan||P B A Infrastructure Ltd|
To the Members of
M/s PBA Infrastructure Limited.
Report on the Audit of Standalone Financial Statements Opinion
1. We have audited the accompanying financial statements of M/s. PBA InfrastructureLimited ("the Company") which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the 12 months period ended and asummary of the significant accounting policies and other explanatory information.
2. 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 theCompanies Act 2013 (Act') in the manner so required and give a true and fair viewin accordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS') specified under Section 133 of the Act of thestate of affairs(financial position) of the Company as at 31st March 2019 andits profit and loss (financial performance including other comprehensive income) its cashflows and changes in equity for the 12 months ended on that date.
3. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementsection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the rules thereunder 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 opinion.
4. Emphasis of Matter a) Loan Statements pertaining to certain loans fromsome banks & financial institutions have not been received and reconciled. Furtherdue to pending clarifications & confirmations from some banks and financialinstitutions for certain current/cash credit/term loan accounts entries have not beenreconciled.
Hence to that effect in any of such pending reconciliation of financial statementsremain unascertained. Lead bank under consortium has approached CMM Court to take physicalpossession of the various secured assets against total consortium overdue debt ofRs.417.51crores under Securitization and Reconstruction of Financial Assets andEnforcement of Security Interest Act 2002. The Company has approached Debt RecoveryTribunal seeking various reliefs against the above mentioned notice. The Company hasproposed One Time Settlement with the Banks for an aggregate amount of Rs.75 crores on 30thDecember 2017 which is revised time to time and final offer of Rs.150 crores have beenmade in August 2018 hence interest on these loans is not provided for financial year2018-19. b) There were/ are defaults in repayment of its Public Deposits and InterCorporate Deposits on maturity and payment of interest thereon for the past few years withrepayment being delayed. c) There are litigations / arbitration proceedings / legal casesagainst the Company which may result in Compensation/ Interest & Penalties. d) Fixedasset register is under compilation to have proper records showing full particularsincluding quantitative details and situation of property; plant and equipment. Company tohave a regular program of physical verification of its fixed assets periodically. e)Company follows accounting practice of recognizing revenue on the basis percentagecompletion method. Company being an EPC contractor raises claims / arbitration money withemployers/Customers for the delay on obtaining approvals cost escalation etc. As perCompany policy though the claims are raised for the actual loss incurred by the Companythe same is recognized in the books at realizable value of Rs.132.65 crores which isdetermined by the internal team of the Company. Though these claims are not acknowledgedby the employer / Customer the same being intangible in nature is being classified asWork-in-progress. Unbilled work-in-progress of Rs.132.65 crores and trade receivablesamounting to Rs.39.32 crores as at 31st March 2019 which represent variousclaims raised in the earlier years in respect of projects substantially closed orsuspended and where the claims are currently under negotiations discussionsarbitrations litigation raised on legal opinion / past experience with respect to suchclaims management is of the view that the aforementioned balances are fully recoverable.f) The preparation of financial statement of the 6 Company is on the basis of goingconcern assumption / reasons despite classification of credit facilities as NPA byBankers loss suffered by the Company on account of low turnover and liquidity crunch tomeet its obligations. The Company's continuing as a going concern is dependent ongeneration of required cash flow arising out of turnover to able to meet its present /future obligations and also favorable outcome for the settlement offer given by theCompany to various lenders.
Thus there is an existence of a material uncertainty as going concern of the Company.g) Equity shares of the Company are under suspension w.e.f. 09.04.2019 as per BSE Noticedated 18th March 2019 No. 20190318/41 and NSE letter dated 5th April2019 under reference no. NSE/SOP/SUS/78387.
Information other than the Financial Statements and Auditor's Report thereon.
5. 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 Financial statements and our auditor's report thereon. The annual report is expectedto be made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance thereon In connection with our audit of thefinancial statements our responsibility is to read the other information identified abovewhen it becomes available and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.
When we read the Annual Report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.
Responsibility of Management and Those Charged with Governance for the FinancialStatements
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 Ind AS specifiedunder Section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
7. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements.
8. Our objectives are to audit to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether 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 Standards on Auditing 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 financial statements.
As part of an audit in accordance with Standards of Auditing we exercise professionaljudgement throughout the audit. We also Identify and assess the risks of materialmisstatement of the financial statements whether due to fraud or error design andperform audit procedures responsive to those risks and obtain audit evidence that issufficient and appropriate to provide a basis for our opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than from one resulting from erroras fraud may involve collusion forgery intentional omissions misrepresentations or theoverride of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are responsible for explaining our opinion on whether the Company has adequateinternal financial controls system in place and the operating effectiveness of suchcontrols.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by 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 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 financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation. We communicate withthose charged with governance regarding among other matters the planned scope and timingof the audit and significant audit findings including any significant deficiencies ininternal 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.
Report on Other Legal and Regulatory Requirements
9. As required by section 197 (16) of the Act we report that the Company has paidremuneration to its Director's during the 12 months period ended 31st March2019 in accordance with the provisions of and limits laid down under section 197 read withSchedule V to the Act.
10. As required by the Companies (Auditor's Report) Order 2016 (the Order')issued by the Central Government of India in terms of section 143(11) of the Act we givein the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.
11. Further to our comments in Annexure I as required by Section 143(3) of the Act wereport that: a. We have sought and obtained all the information and explanations which tothe best of our knowledge and belief were necessary for the purposes of our audit. b.Except for the possible effect of the matters described in the Emphasis of Matter'paragraph above in our opinion proper books of account as required by law have been keptby the Company so far as it appears from our examination of those books; c. the financialstatements dealt with by this report are in agreement with the books of account; d. Exceptfor possible effect of the matters described in the Emphasis of Matter' paragraphabove in our opinion the aforesaid financial statements comply with Ind AS specifiedunder Section 133 of the Act; e. On the basis of written representations received from theDirectors and taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2019 from being appointed as a director in termsof Section 164(2) of the Act; f. With respect to the adequacy of the internal financialcontrols over financial reporting of the Company and the operating effectiveness of suchcontrols refer to our separate report in "Annexure II" to this report.g. With respect to the other matters to be included in the Auditor's Report in accordancewith the Rule 11 of Companies (Audit and Auditors) Rules 2014 (as amended) in ouropinion and to the best of our information and according to the explanation given to us:
- The Company has pending litigations the impact of which is not known as at 31 March2019.
- Company did not have any Long term contract including derivatives contract as suchthe question of commenting on any material foreseeable losses thereon does not arise.
- there has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company during the 12 months period ended 31stMarch 2019.
Annexure I to the Independent Auditor's Report of even date to the members of PBAInfrastructure Ltd. on the financial statements for the twelve months period ended 31stMarch 2019.
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that: i. In respect of the Company's fixed assets a. Fixed asset register isunder compilation to have proper records showing full particulars including quantitativedetails and situation of property; plant and equipment. b. Company to have a regularprogram of physical verification of its fixed assets periodically. In accordance certainfixed assets wherein projects have been completed are not identifiable; hencediscrepancies exist. In our opinions this periodicity of physical verification needs tobe reasonable having regard to the size of the Company and the nature 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 explainedto us the inventories have been physically verified during the year by the management. Inour opinion having regard to the nature and location of stocks the frequency of thephysical verification is reasonable. b. Company follows accounting practice of recognizingrevenue under IndAS-7 on the basis percentage completion method. Company being an EPCcontractor raises claims / arbitration money with employers/Customers with regard to delayon obtaining approvals cost escalation etc. As per Company policy though the claim maybe raised for the actual loss incurred by the Company on account of delay with respect tothe employer/customer the same is recognized in the books depending upon the realizablevalue of the same which is determined by the internal team of the Company. Though theseclaims are not acknowledged by the employer / debtor the same being intangible in natureis being classified as WIP / receivable by the Company.
As on 31st March 2019 WIP includes claims of Rs.132.65 crores andreceivables includes claims of Rs.39.32 crores. iii. Company has not granted any loansecured or unsecured to bodies corporate covered in the register maintained under section189 of the Companies Act2013 (the Act'). Accordingly the provisions of Clauses3(iii)(a) 3(iii)(b) and 3(iii)(c) of the order are not applicable. iv. In our opinion andaccording to the information and explanations given to us the company has complied withthe provisions of section 185 and 186 of the Companies Act 2013 in respect of loansinvestments 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. During the year FY 2018-19 costaudit is not applicable. vii. According to the information and explanations given tous:-a. Undisputed amounts payable in respect of provident fund employees' stateinsurance income tax sales tax wealth tax service tax goods and services tax duty ofexcise duty of customs Value Added Tax and other material statutory dues as applicablehave generally been regularly deposited to the appropriate authorities except for thefollowing which were in arrears as at 31st March 2019 for a period of more than six monthsfrom the date they became payable:-
b. 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:-
viii. The Company has defaulted in the repayment of dues to financial institutions andbanks. The details of such default are given below. There are no loans or borrowingspayable to Government and debenture holders
ix. The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). x. Based upon the audit procedures performed and theinformation and explanations given by the management we report that no fraud by theCompany or on the company by its officers or employees has been noticed or reported duringthe year. xi. 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.
xii. In our opinion the Company is not a Nidhi Company.
Therefore the provisions of clause 3 (xii) of the Order are not applicable. xiii. Inour opinion all transactions with the related parties are in compliance with section 177and 188 of the Act where applicable and the requisite details have been disclosed in theFinancial Statements as required by the applicable Ind AS. xiv. According to theinformation and explanations given by the management the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review. xv. According to the information and explanationsgiven by the management the Company has not entered into any non-cash transactions withdirectors or persons connected with him covered under section 192 of the Act. xvi. Companyis not required to be registered under Section 45-IA of the Reserve Bank of India Act1934.
Annexure II to the Independent Auditor's Report of even date to the members of PBAInfrastructure Limited on the financial statements for the 12 months period ended on31stMarch 2019 Report on the Internal Financial Controls under Clause (i) of Sub-section 3of Section 143 of the Companies Act 2013 ("the Act")
1. We have audited the internal financial controls over financial reporting of M/s. PBAInfrastructure Limited ("the Company") as of March 31 2019 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
2. The Company's Board of Directors and senior management is responsible forestablishing and maintaining internal financial controls based on the internal controlover financial reporting 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 (ICAI'). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of Company'sbusiness 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.
3. 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 Standards on Auditing issued by ICAI and deemed to be prescribed under section143(10) of the Act to the extent applicable to an audit of internal financial controlsover financial reporting and the guidance note issued by the ICAI. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls 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.
5. 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 overfinancial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
6. Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2)provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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
7. 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.
8. In our opinion the Company has in all material respects adequate internalfinancial controls over financial reporting and such controls over financial reportingwere operating effectively as at 31st March 2019 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note issued by the ICAI.