BGR ENERGY Auditors Report

TO THE MEMBERS OF BGR ENERGY SYSTEMS LIMITED Report on the Standalone Financial Statements


We have audited the accompanying standalone financial statements of BGR Energy Systems Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.


MANAGEMENT’S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS


The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation & presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error


AUDITORS’ RESPONSIBILITY


Our responsibility is to express an opinion on these standalone financial statements based on our audit.


We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit 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 under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.


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


We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on standalone financial statements.


OPINION


In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2016, and its profit and its cash flows for the year ended on that date.


REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS


1) As required by the Companies (Auditors’ Report) Order, 2016 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.


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


a. we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;


b. in our opinion, proper books of account as required by law have 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, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;


d. in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;


e. on the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms of Section 164(2) of the Act;


f. with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure B; and


g. with respect to the other matters to be included in the Auditors’ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:


i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note nos. 12.1, 12.2 and 35 to the standalone financial statements;


ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts; and


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


ANNEXURE- A TO THE INDEPENDENT AUDITORS’ REPORT ON THE STANDALONE FINANCIAL STATEMENTS


The Annexure referred to in paragraph 1 under the heading “Report on Other Legal and Regulatory Requirements” of our Independent Auditors’ Report to the members of BGR ENERGY SYSTEMS LIMITED for the year ended March 31, 2016, we report that:


(i) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;


(b) The Company has a regular program of physical verification of its fixed assets by which fixed assets are verified in a phased manner on a rotational basis. In accordance with this program, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets; and


(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.


(ii) According to the information and explanations given to us and on the basis of our examination of the records of the Company, we are of the opinion that the management has conducted the physical verification of inventory at reasonable intervals during the year. There are no material discrepancies were noticed between book stock and physical stock on physical verification conducted by the management.


(iii) The Company has not granted any loans to parties covered in the register maintained under section 189 of the Act during the year. Accordingly, paragraph 3(iii)(a), (b) and (c) of the Order is not applicable.


(iv) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the company has given guarantees to 2 parties as covered under Section 185 of the Act prior to the financial year 2015-16. The maximum amount involved and the year-end balance of these guarantees amounts to Rs. 672.94 lakhs and Rs. 669.30 lakhs respectively.


In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 186 of the Act.


(v) The Company has not accepted any deposits from the public within the meaning of sections 73 to 76 of the Act and the rules framed there under to the extent notified. Accordingly, paragraph 3(v) of the Order is not applicable.


(vi) We have broadly reviewed the cost records maintained by the Company as specified by the Central Government under Section 148(1) of the Act and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.


(vii)(a) In our opinion and according to the information given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees’ State Insurance, Profession Tax, Income-tax, Sales-tax, Value Added Tax, Works Contract Tax, Service tax, Customs Duty, Excise Duty, Cess and other statutory dues have generally been regularly deposited during the year by the company with the appropriate authorities.


According to the information and


explanations given to us and on the basis of our examination of the records of the Company, no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Profession Tax, Income-tax, Sales-tax, Value Added Tax, Works Contract Tax, Service tax, Customs Duty, Excise Duty, Cess were in arrears as at March 31, 2016, for a period of more than six months from the date they became payable; and


(b) As per the information and explanations given to us, the following are the details of statutory dues which have not been deposited by the Company on account of disputes:





































































































































































































































































































Name of the Statute



Nature of the Dues



Amount (Rs. in lakhs)



Financial


year



Forum in which the Appeal is lying in



Central Sales Tax Act, 1956



Central Sales Tax



4.20



1997-98



The Honourable High Court, Andhra Pradesh.



Central Sales Tax Act, 1956



Central Sales Tax



35.03



1997-98



The Honourable High Court, Andhra Pradesh.



Andhra Pradesh Value Added Tax Act, 2005



Andhra Pradesh Sales Tax



0.12



1998-99



Commercial Tax officer, Andhra Pradesh.



Tamil Nadu General Sales Tax Act, 1959



Tamil Nadu Sales Tax



0.11



1999-00



Commercial Tax officer, Tamilnadu.



Tamil Nadu General Sales Tax Act, 1959



Tamil Nadu Sales Tax



2.21



2001-02



Sales Tax Appellate Tribunal, Chennai, Tamilnadu.



Central Sales Tax act, 1956



Central Sales Tax



(1) 5.58



2004-05



Sales Tax Appellate Tribunal, Vishakapatnam, Andhra Pradesh.



Andhra Pradesh Value Added Tax Act, 2005



Andhra Pradesh Sales Tax (Penalty)



(1> 2.59



2006-07



Sales Tax Appellate Tribunal, Vishakapatnam, Andhra Pradesh.



Kerala Value Added Tax Act, 2003



Kerala Sales Tax



(1> 2.65



2006-07



The Deputy Commisioner (Appeals), Ernakulam, Kerala



Central Sales Tax Act, 1956



Central Sales Tax



(1> 157.14



2006-07



Appellate Deputy Commissioner, Kancheepuram, Tamilnadu.



Central Sales Tax Act, 1956



Central Sales Tax



|1&3)420.37



2007-08



Appellate Deputy Commissioner, Kancheepuram, Tamilnadu.



Andhra Pradesh Value Added Tax Act, 2005



Andhra Pradesh Sales Tax (Penalty)



(1> 7.43



2007-08



Sales Tax Appellate Tribunal, Vishakapatnam, Andhra Pradesh.



Chapter V of Finance Act, 1994



Service Tax



(2> 25.00



2007-08



CESTAT, Chennai, Tamilnadu.



Central Sales Tax Act, 1956



Central Sales Tax



(1&3> 389.54



2008-09



Appellate Deputy Commissioner, Kancheepuram, Tamilnadu.



Andhra Pradesh Value Added Tax Act, 2005



Andhra Pradesh Sales Tax



118.43



2008-09



The Sales Tax Appellate Tribunal, Andhra Pradesh



Tamil Nadu Value Added Tax Act , 2006



Tamil Nadu Sales Tax



(1> 7.14



2008-09



The Appellate Deputy Commissioner (CT) North, Chennai.



Central Sales Tax Act, 1956



Central Sales Tax



(1> 248.74



2009-10



The Appellate Deputy Commissioner (CT) North, Chennai.



Central Sales Tax Act, 1956



Central Sales Tax



(1> 792.05



2010-11



The Appellate Deputy Commissioner (CT) North, Chennai.



Andhra Pradesh Value Added Tax Act, 2005



Andhra Pradesh Sales Tax



(1> 39.36



2010-11



The Appellate Deputy Commissioner. Guntur



Andhra Pradesh Value Added Tax Act, 2005



Andhra Pradesh Sales Tax (Penalty)



(1> 3.94



2010-11



The Appellate Deputy Commissioner. Guntur



Income Tax Act, 1961



Income Tax



137.65



2006-07



The Honourable High Court, Andhra Pradesh



Income Tax Act, 1961



Income Tax



141.67



2007-08



The Honourable High Court, Andhra Pradesh



Income Tax Act, 1961



Income Tax



(1> 25.36



2007-08



Commissioner of Income Tax (Appeals), Chennai



Income Tax Act, 1961



Income Tax



192.15



2008-09



The Honourable High court, Andhra Pradesh



Income Tax Act, 1961



Income Tax



(1> 36.62



2008-09



Commissioner of Income Tax (Appeals), Chennai



Income Tax Act, 1961



Income Tax



(1) 10376.98



2009-10



Commissioner of Income Tax (Appeals), Chennai



Income Tax Act, 1961



Income Tax



(1) 120.06



2010-11



Commissioner of Income Tax (Appeals), Chennai



Income Tax Act, 1961



Income Tax



958.43



2011-12



Commissioner of Income Tax (Appeals), Chennai



Income Tax Act, 1961



Income Tax



(1) 97.67



2012-13



Commissioner of Income Tax (Appeals), Chennai



Income Tax Act, 1961



Income Tax



(1) 116.39



2013-14



Commissioner of Income Tax (Appeals), Chennai



Mines & Minerals (Development & Regulations) Act, 1957



Royalty



(3) 1926.45



2010-11



The Honourable High Court, Bombay.



Mines & Minerals (Development & Regulations) Act, 1957



Royalty



(3)211.45



2010-11



The Honourable High Court, Bombay.



The Employee Provident Fund & Miscellaneous Provisions Act, 1952



Provident Fund



(1) 521.15



2006-2010



The Honourable High Court, Hyderabad



The Rajasthan Value Added Tax, 2003



Rajasthan Sales Tax



(184) 9866.00



2009-2010



Rajasthan Tax Board, Ajmer



The Rajasthan Value Added Tax, 2003



Rajasthan Sales Tax



(4) 9541.00



2010-2011



Rajasthan Tax Board, Ajmer



The Rajasthan Value Added Tax, 2003



Rajasthan Sales Tax



(4) 4334.00



2011-2012



Rajasthan Tax Board, Ajmer



Central Sales Tax ACT, 1956



Central Sales Tax



(1) 630.60



2011-12



The Appellate Deputy Commissioner (CT) North, Chennai.



Andhra Pradesh Value Added Tax Act, 2005



Andhra Pradesh Sales Tax



431.88



2011-12



The Appellate Deputy Commissioner, Guntur.



Central Sales Tax Act, 1956



Central Sales Tax



65.35



2012-13



The Appellate Deputy Commissioner (CT) North, Chennai.



Central Sales Tax Act, 1956



Central Sales Tax



(1) 461.07



2013-14



The Appellate Deputy Commissioner (CT) North, Chennai.



The Rajasthan Value Added Tax, 2003



Rajasthan Sales Tax



1,110.92



2012-13



The Appellate Authority, Ajmer



(1)Represents gross tax liability. Out of this, a sum of Rs.5,867/- lakhs was paid as deposit/adjusted against refund due.


(2) Excludes interest and penalty which are not ascertainable.


(3)Stay Order has been received against the amount disputed and not deposited.


(4) Excludes interest and penalty.


(viii) According to the information and explanation given to us and on the basis of our examination of the books of account, the Company has not defaulted in repayment of loans or borrowings to any financial institutions or banks.


(ix) During the year the Company did not raise any money by way of initial public offer or further public offer (including debt instruments). As per the information and explanations provided to us and on basis of our examination of books of account, we are of the opinion that the term loans were applied for the purpose for which they were availed.


(x) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the year, nor have we been informed of such case by the management.


(xi) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid / provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.


(xii) In our opinion and according to the information and explanations given to us, the Company is not a 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 of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of Act where ever applicable and the details of such transactions have been disclosed in the financial Statements as required by the applicable accounting standards.


(xiv) According to the information and explanations given to us and based on our examinations of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures 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 examinations of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.


(xvi) I n our opinion and according to the information and explanations given to us, the company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934. Accordingly, paragraph 3(xvi) of the Order is not applicable.


ANNEXURE - B TO THE INDEPENDENT AUDITORS’ REPORT ON THE STANDALONE FINANCIAL STATEMENTS


Report on the Internal Financial Controls under Clause (i) of sub - section (3) of section 143 of the Companies Act, 2013 (“the Act)


We have audited the internal financial controls over financial reporting of BGR Energy Systems Limited (“the Company”) as of March 31, 2016, in conjunction with our audit of the standalone financial 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 internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.


AUDITORS’ RESPONSIBILITY


Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.


Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.


We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.


MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING


A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that:


i. Pertain to the maintenance of records that, in reasonable details, accurately and fairly reflect the transactions and dispositions of the assets of the company;


ii. Provide reasonable assurance that


transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and


iii. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’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 financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


OPINION


In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on “the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India”.


For Manohar Chowdhry & Associates


Chartered Accountants


Firm Registration Number: 001997S


M.S.N.M. Santosh


Partner


Membership Number: 221916


Place: Chennai


Date: May 30, 2016

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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