Mar 31, 2023
BHAGYANAGAR INDIA LIMITED
Report on the Audit of Standalone Financial Statements
Opinion
We have audited the accompanying financial statements of BHAGYANAGAR INDIA LIMITED (âthe Companyâ), which comprise the Standalone Balance Sheet as at 31st March, 2023, the Standalone Statement of Profit and Loss (including the statement of Other Comprehensive Income), the Standalone Cash Flow Statement and the Standalone statement of change in Equity for the year then ended and notes to the Standalone Financial Statements, including the summary of the significant accounting policies and other explanatory information (âThe Standalone Financial Statementsâ).
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 Companies Act, 2013 as amended (âthe Actâ) in the manner so required and give a true and fair view in conformity with accounting principles generally accepted in India, of the state of affairs of the company as at March 31 , 2023 , of total comprehensive income (comprising of profit and other comprehensive income), standalone changes in equity and its standalone cash flows for the year ended .
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements'' section of our report. We are independent of the Company in accordance with the âCode of Ethics'' issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our Audit of the Standalone Financial Statements under the provision of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Financial Statements.
We draw attention to the following matters:
(a) Note No.58 of the accompanying Standalone Financial Statements wherein, balances under the head Claims Recoverable, Loans & Advances, Deposits from and with various parties and certain balances of trade receivables, trade payables and other current liabilities have not been confirmed as at March 31, 2023, although letters have been sent by the Company seeking confirmation of balances. Consequential impact upon receipt of such confirmation / reconciliation / adjustments of such balances, if any is not ascertainable at this stage.
(b) Note No.47 of the notes to accounts to the accompanying standalone financial statements which refers that the GST authorities conducted an investigation and on the insistence of the authorities, the company has deposited an amount of Rs.800 lakhs with GST Department under protest and shown in financial statements under the head âCurrent Assetsâ. The company has not received any show cause notice till date. The company has been advised by the legal experts that it has fair chance of ultimately succeeding in the matter and accordingly no provision has been made in the books of accounts.
Key Audit Matters
1. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context:
Descriptions of Key Audit Matter |
How we addressed the matter in our audit |
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1. Accuracy and completeness of revenue recognized. |
We addressed the Key Audit Matter as follows :- |
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Refer to note 25 to the Standalone Financial Statements, the Company reported revenue of Rs.138701.06 Lakhs from sale of copper products. The application of revenue recognition accounting standards is complex and involves a number of key judgments and estimates. Due to the estimates and judgment and complexity involved in the application of the revenue recognition accounting standards, we have considered this matter as a key audit matter. The Company''s accounting policies relating to revenue recognition are presented in note 12 to the financial statements. |
1. 2. 3. |
As part of our audit, we understood the Company''s policies and processes, control mechanisms and methods in relation to the revenue recognition and evaluated the design and operating effectiveness of the financial controls from the above through our test of control procedures. Assessed the Company''s revenue recognition accounting policies in line with Ind AS 115 (âRevenue from Contracts with Customersâ) and tested thereof. Review the company''s judgment in determining whether the performance obligation is satisfied at a point in time or over a period of time. |
4. |
Tested a sample of sales transactions for compliance with the Company''s accounting. |
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Principles to assess the completeness and accuracy of revenue recorded. |
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5. |
We evaluated the management''s process to recognize revenue over a period of time, total cost estimates, status of the projects and re-calculated the arithmetic accuracy of the same. |
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6. |
Evaluated management assessment of the impact on revenue recognition. |
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7. |
We examined contracts with exceptions including contracts with low or negative margins, loss making contracts, etc to determine the level of provisioning. |
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8. |
Our tests of detail focused on transactions occurring within proximity of the year end and obtaining evidence to support the appropriate timing of revenue recognition, based on terms and conditions set out in sales contracts and delivery documents. We considered the appropriateness and accuracy of any cut-off adjustments. |
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9. |
Performed analytical procedures over revenue and receivables. Compared revenue with historical trends and where appropriate, conducted further enquiries and testing. |
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10. |
Traced disclosure information to accounting records and other supporting documentation. |
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11. |
Assessed disclosures in financial statements in respect of revenue, as specified in Ind AS 115. |
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12. |
Our Observation: |
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Based on the audit procedures performed we did not identify any material exceptions in the revenue recognition. |
Descriptions of Key Audit Matter |
How we addressed the matter in our audit |
2. Valuation of Inventories. Refer to note 11 to the Standalone Financial Statements, the Company is having the Inventories of Rs.8910.53 Lakhs as on 31st March 2023. As described in the accounting policies in note 1 to the standalone financial statements, inventories are carried at the lower of cost and net realisable value. As a result, the management applies judgment in determining the appropriate provisions for obsolete stock based upon a detailed analysis of old inventory, net realisable value below cost based upon future plans for sale of inventory. |
We addressed the Key Audit Matter as follows :- We obtained assurance over the appropriateness of the management''s assumptions applied in calculating the value of the inventories and related provisions and management assertion regarding existence and ownership by:- 1. Completed a walkthrough of the inventory valuation process and assessed the design and implementation of the key controls addressing the risk. 2. Verifying the effectiveness of key inventory controls operating over inventories; 3. Reviewing the physical verification documents related to inventories conducted during the year. 4. Verifying for a sample of individual products that costs have been correctly recorded. 3. Comparing the net realisable value to the cost price of inventories to check for completeness of the associated provision. 4. Reviewing the historical accuracy of inventory provisioning and the level of inventory write-offs during the year. 5. Re-computing provisions recorded to verify that they are in line with the Company policy. 6. Our Observation: Based on the audit procedures performed we did not identify any material exceptions in the Inventory valuation and existence. |
Information Other than the Standalone Financial Statements and Auditorâs Report Thereon
The Company''s Board of Directors is responsible for the other information. The other information comprise the information included in the annual report, but does not include the financial statements and our auditor''s report thereon. The annual report is expected to 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 we will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
When we read the annual report, If we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate action as applicable under the relevant laws and regulations.
Management 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 (âthe Actâ) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act read with companies (Indian Accounting Standards) Rule, 2015, as amended. 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the company''s financial reporting process.
Auditorâs Responsibilities for the Audit of Standalone Financial Statements.
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud any involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone 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''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditor''s Report) Order, 2023 (the âOrderâ) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the âAnnexure Bâ statement on the matters Specified in paragraphs 3 and 4 of the Order.
2) As required by section 143(3) of the Act, based on our audit 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 including the statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
d. In our opinion, the aforesaid financial statements comply with the Ind AS specified under section 133 of the Act.
e. On the basis of written representations received from the directors as on March 31, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023 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 âAnnexure Aâ. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.
g. With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanations given to us, the remuneration has been paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
h. With respect to other matters to be included in the Auditor''s 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 notes to the Standalone Financial Statements.
(ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as on March 31,2023 .
(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund.
(iv) a) The Management has represented to us, to the best of their knowledge and belief, no funds
have been advanced or loaned or invested (either from the borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity including foreign entity (âIntermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (âUltimate beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate beneficiaries.
b) The Management of the Company have represented to us, to the best of the knowledge and belief, no funds have been received by the company from any person or entity, including foreign entity (âFunding partiesâ) with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, lend or invest in other persons or entities identified in any manner what''s the whatsoever by or on behalf of the funding party (âUltimate beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c) Based on audit procedures that have been considered reasonable and appropriate in the circumstances performed by us on the Company, nothing has come to our notice that has caused us to believe that the representations are under sub clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
3) The company has not declared any dividend in the previous financial year which has been paid in current year. Further, no dividend has been declared/ proposed for the current year accordingly the section 123 of the Act is not applicable to the company.
4) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.
For Luharuka & Associates Chartered Accountants Firm Reg No: - 01882S
Naveen Lohia (Partner)
Place : Secunderabad Membership No.214548
Date : 27th May, 2023 UDIN: 23214548BGWOPB5790
Mar 31, 2018
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying Standalone Ind AS financial statements of M/s. Bhagyanagar India Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss including the statement of Other Comprehensive Income, the Cash Flow Statement and the statement of change in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information
Managementâs Responsibility for the Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the companies (Indian Accounting Standards) Rule, 2015, as amended. 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 Standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these standalone Ind AS 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 of the standalone Ind AS financial statements in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as 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 disclosures in the financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the standalone Ind AS 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 accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the standalone Ind AS 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, 2018, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the âAnnexure Aâ statement on the matters Specified in paragraphs 3 and 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 best of 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 the Company so far as appears from our examination of those books;
c. The Balance Sheet, Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
d. In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 Companies (Indian Accounting Standards) Rules, 2015, as amended;
e. on the basis of written representations received from the directors as on March 31, 2018, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018, 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 âAnnexure Bâ; and
g. With respect to other matters to be included in the Auditorâs 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 which would impact its financial position. Refer note No. 33 to the financial statement.
(ii) The Company has made provision, as required under the applicable law or accounting standard, for material foreseeable losses, if any, on long-term contracts including derivative contracts;
(iii) During the year the Company has transfer the required amount to the Investor Education and Protection Fund and there is no delay in transferring of such sum.
Other Matter
The comparative financial information of the Company for the year ended 31st March 2017 and the transition date opening balance sheet as at 1st April 2016 are based on previously issued statutory financial statements prepared in accordance with the companies (Accounting Standards ) Rules, 2006 audited by the predecessor auditor whose reports for the year ended 3151 March 2017 and 31st March 2016, dated 18th May 2017 and 24th May 2016 respectively expressed an unmodified opinion on those statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us.
Our opinion is not qualified in respect of these matters.
Annexure-A referred to in Independent Auditorsâ Report to the members of the Company on the standalone financial statements for the year ended 31st March, 2018, we report that
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets ;
(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals. According to the information and explanation given us, no material discrepancies were noticed on such verification;
(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) (a) The inventories have been physically verified at reasonable intervals by the management.
(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.
(iii) The company had granted loan to one of its wholly owned subsidiary company as covered in the register maintained under section 189 of the Companies Act, 2013.
(a) In our opinion and according to the information and explanations given to us, the terms and conditions of the grant for such Loan are not prejudicial to the Companyâs interest.
(b) In respect of the aforesaid loans, the schedule of repayment of principle and interest has been stipulated, repayment of principal and interest has been regular as per the stipulation.
(c) There are no overdue amounts in respect of the loan granted to a body corporate listed in the register maintained under section 189 of the Act.
(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, with respect to the loans and investments made.
(v) The Company has not accepted any deposits from the public.
(vi) We have broadly reviewed the cost records maintained by the company prescribed by the Central Government of India under section 148(1) of the Act and are of the opinion that prima facie the prescribed accounts and 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) According to the information and explanations given to us and based on the records of the company examined by us, the company is generally regular in depositing the undisputed statutory dues, including Provident Fund, , Employeesâ State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and other statutory dues, as applicable, with the appropriate authorities in India;
(b) According to the information and explanations given to us and based on the records of the company examined by us, no undisputed amounts payable in respect of Provident Fund, Income Tax, Sales Tax, Wealth Tax and other material statutory dues for a period of more than six months from the date they become payable, except the following disputed statutory liabilities have not been deposited in view of pending Appeals.
Name of Statue |
Nature of dues |
Amount involved in dispute & not paid |
Period to which it relates |
Forum where dispute is pending |
Central Excise Act, 1944 |
Excise Duty |
25,60,007/- |
2010 |
Appeal is pending against CESTAT |
20,00,000/- |
2011 |
Appeal is pending against CESTAT |
(viii) According to the records of the company examined by us and as per the information and explanations given to us, the company has not defaulted in repayment of loans from any financial institution or banks and has not issued debentures.
(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3 (ix) of the Order is not applicable.
(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.
(xi) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has provided for managerial remuneration in accordance with 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 the Act where applicable and 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 give to us and based on our examination 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.
(xv) According to the information and explanations given to us and based on our examination 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) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
Annexure - B to the Auditorsâ Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting of M/s. Bhagyanagar India Limited (âthe Companyâ) as of 31 March 2018 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs 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 (âICAIâ). 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 companyâs 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 Companies Act, 2013.
Auditorsâ Responsibility
Our responsibility is to express an opinion on the Companyâs 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 âGuidance Noteâ) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, 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 auditorâs 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 Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companyâs 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 companyâs internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) 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 authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companyâs 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 31 March 2018, 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 Luharuka & Associates
Chartered Accountants
Firm Reg No:- 01882S
Rameshchand Jain
Place: Secunderabad (Partner)
Date: 26th May, 2018 Membership No.023019
Mar 31, 2016
Report on the Financial Statements
We have audited the accompanying financial statements of Bhagyanagar India Limited (âthe Companyâ), which comprise the Balance Sheet as at 31 March 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
Managementâs Responsibility for the Financial Statements
The Company''s Board of Directors is responsible for the matters in section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 internal financial control, 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.
Auditorâs Responsibility
Our responsibility is to express an opinion on these 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 disclosures in the financial statements. The procedures selected depend on the auditor''s 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 accounting policies used and the reasonableness of the accounting estimates made by the management 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 the financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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.
Emphasis of Matter
We draw your attention to Note 2.25 of the financial statements wherein the management has disclosed the details of Claims against the company not acknowledged as debt in respect of matters under dispute with statutory authorities.
Our opinion is not modified in this matter.
Report on other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2016 (âthe Orderâ) as amended, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in âAnnexure - Aâ a statement on matters specified in paragraphs 3 and 4 of the Order.
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 Cash Flow Statement dealt with by this Report are in agreement with the books of account.
d. In our opinion, the aforesaid 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 written representations received from the directors as on 31st March, 2016, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 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 âAnnexure Bâ.
g. With respect to the other matters included in the Auditor''s Report and in accordance with Rule 11 of Companies (Audit and Auditors) Rules, 2014 and in our opinion and to the best of our information and explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements -Refer Note 2.25 to the financial statements and also included in the Emphasis of matter paragraph above;
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.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
Re: Bhagyanagar India Limited
i. a) The Company has maintained proper records showing full particular including quantitative details and situation of fixed assets.
b) As explained to us, the fixed assets have been physically verified by the management in a phased manner designed to cover all the fixed assets over the year. In respect of fixed assets verified according to this program, which we consider reasonable, no material discrepancies were noticed on such verification.
c) The title deeds of immovable properties are held in the name of the company.
ii. The inventory, except Goods-in-transit, has been physically verified by the management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable. In respect of inventory lying with third parties, these have substantially been confirmed by them. No material discrepancies were noticed on physical verification.
iii. The Company has granted unsecured loans to six parties covered in the register maintained under section 189 of the Act. There are no firms/ LLPs/ other parties covered in the register maintained under Section 189 of the Act.
a) In respect of the aforesaid loans, the terms and conditions under which such loans were granted are not prejudicial to the company''s interest.
b) In respect of the aforesaid loans, the schedule of repayment of principle and interest has not been stipulated. Due to absence of schedule of repayment, the regularity of the same could not be commented.
c) In absence of specific schedule of repayment of loans, we are of the opinion of no overdue amounts.
iv. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Section 185 and 186 of the Companies Act, 2013 in respect of loans, investments, guarantees and security.
v. The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable.
vi. We have broadly reviewed the cost records maintained by the Company prescribed by the Central Government of India under Section 148(1) of the Act and are of the opinion that prima facie the prescribed accounts and 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) According to information and explanations given to us and on the basis of our examination of the books of accounts and records, the Company has been generally regular in depositing undisputed statutory dues with appropriate authorities including provident fund, employees'' state insurance, income tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the above were in arrears as at March 31,2016 for a period of more than six months from the date on when they become payable.
a) According to the information and explanations given to us, there are no dues of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax outstanding on account of any dispute.
b) Details of dues of Duty of Excise, Duty of Customs and Income Tax which have not been deposited as on 31st March 2016 on account of disputes are given below:
Sl. No. |
Name of Statute |
Nature of Dues |
Amount not paid/ (Amount involved in dispute) |
Period to which it relates |
Forum where dispute is pending |
1 |
Central Excise Act, 1944 |
Excise Duty |
25,69,007 (25,69,007) |
2008-09 |
Appellate Additional Commissioner - Hyd |
NIL (20,00,000) |
Various Years |
|
|||
2 |
Customs Act, 1964 |
Custom Duty |
NIL (1,80,40,837) |
2008-09 |
Supreme Court of India |
3 |
Income Tax Act, 1961 |
Income Tax |
NIL (1,05,36,490) |
2012-13 |
CIT Appeals |
Figures in brackets are the amounts involved in dispute. The taxes paid against the above disputes at Rs.2,00,60,932 are shown under heads Taxes paid under protest are included in Long Term Advances and Income Tax Receivable under other current assets. |
viii. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks. The Company has not taken any loan either from financial institutions or from the government and has not issued any debentures.
ix. Based upon the audit procedures performed and the information and explanations given by the management, the company has not raised moneys by way of initial public offer or further public offer including debt instruments and term loans. Accordingly, the provisions of clause 3 (ix) of the Order are not applicable to the Company and hence not commented upon.
x. Based upon the audit procedures performed and the information and explanations given by the management, we report that no fraud by the company or on the company by its officers or employees has been noticed or reported during the year.
xi. Based upon the audit procedures performed and the information and explanations given by the management, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.
xii. In our opinion, the Company is not a Nidhi company. Therefore, the provisions of clause 4 (xii) of the Order are not applicable to the Company.
xiii. In our opinion, all transactions with the related parties are in compliance with Section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.
xiv. Based upon the audit procedures performed and the information and explanations given by the management, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the company and hence not commented upon.
xv. Based upon the audit procedures performed and the information and explanations given by the management, the company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the company and hence not commented upon.
xvi. In our opinion, the company is not required to be registered under Section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the company and hence not commented upon.
For Sekhar& Co.,
Chartered Accountants
FRN: 003695-S
G.Ganesh
Place : Secunderabad Partner
Date : 24-May-2016 M.No.:211704
Mar 31, 2015
We have audited the accompanying financial statements of Bhagyanagar
India Limited ("the Company"), which comprise the Balance Sheet as at
31 March 2015, the Statement of Profit and Loss, the Cash Flow
Statement for the year then ended, and a summary of 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 in
section 134(5) of the Companies Act, 2013 ("the Act") with respect to
the preparation of these 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 the maintenance of
adequate accounting records in accordance with the provision of the Act
for safeguarding of the assets of the Company and for preventing and
detecting the 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 internal financial control, 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.
Auditor's Responsibility
Our responsibility is to express an opinion on these 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 disclosures in the financial statements. The procedures
selected depend on the auditor's 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 but not for the purpose of expressing an opinion on
whether the Company has in place an adequate internal financial control
system over financial reporting and the operating effectiveness of such
controls. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting
estimates made by the management 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 the financial
statements.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid 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, 2015, and its profit and its cash flows for the year ended
on that date.
Emphasis of Matter
We draw your attention to Note 2.26 of the financial statements wherein
the management has disclosed the details of Claims against the company
not acknowledged as debt in respect of matters under dispute with
statutory authorities.
Our opinion is not modified in this matter.
Report on other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, we give in Annexure a
statement on 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 Cash Flow
Statement dealt with by this Report are in agreement with the books of
account
d. In our opinion, the aforesaid 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 written representations received from the directors
as on 31st March, 2015, taken on record by the Board of Directors, none
of the directors is disqualified as on 31 March, 2015, from being
appointed as a director in terms of Section 164(2) of the Act.
f. We are not required to report on clause (i) with respect to
Internal Financial Controls over financial reporting and the operating
effectiveness of the same for the Financial Year ending 31st March
2015, based on the Government of India notification dated October 14,
2014 on the same matter.
g. With respect to the other matters included in the Auditor's Report
and in accordance with Rule 11 of Companies (Audit and Auditors) Rules,
2014 and in our opinion and to the best of our information and
explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements  Refer Note 2.26 to the
financial statements and also included in the Emphasis of matter
paragraph above;
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.
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Re: Bhagyanagar India Limited
i. a) The Company has maintained proper records showing full particular
including quantitative details and situation of fixed assets.
b) As explained to us, the fixed assets have been physically verified
by the management according to the phased program designed to cover all
the fixed assets over the year. In respect of fixed assets verified
according to this program, which we consider reasonable, no material
discrepancies were noticed on such verification.
ii. a) As explained to us, inventories have been physically verified
during the year by the management. In our opinion, the frequency of
verification is reasonable.
b) The procedures explained to us, which are followed by the management
for physical verification of inventories, are in our opinion reasonable
and adequate in relation to the size of the company and nature of its
business.
c) The Company is maintaining proper records of inventory and no
material discrepancies were noticed on physical verification.
iii. The Company has granted loans to six parties covered in the
register maintained under section 189 of the Act. The maximum amount
involved during the year is Rs, 1,316,999,108 and year end outstanding
is Rs, 1,242,149,177.
a) In our opinion and as per the records examined by us, the payment of
principal amount and interest thereon is regular. In respect of
Interest due from subsidiaries the company has added the same to the
principal since the sanction of loan to the subsidiary.
b) There are no overdue amounts in excess of Rs, 1 lakh in respect of
loans granted to companies, firms or other parties listed in register
maintained under section 189 of the Act.
iv. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the company and the nature of its business with regard
to purchase of inventory and fixed assets and for sale of goods and
power. We have not observed any major weakness in the internal control
system during the course of the audit.
v. The Company has not accepted any deposits from the public within the
meaning of sections 73 to 76 or any other relevant provisions of the
Act and rules framed there under.
vi. We have broadly reviewed the cost records maintained by the Company
prescribed by the Central Government of India under Section 148(1) of
the Act and are of the opinion that prima facie the prescribed accounts
and 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) The Company is regular in depositing undisputed statutory dues
with appropriate authorities including provident fund, employees' state
insurance, income tax, sales tax, wealth tax, service tax, duty of
customs, duty of excise, value added tax, cess and any other statutory
dues applicable to it.
b) According to the information and explanations given to us, no
undisputed amounts payable in respect of income tax, sales tax, wealth
tax, service tax, duty of customs, duty of excise, value added tax or
cess were in arrears as at 31st March 2015 for a period more than six
months from the date they became payable.
c) Details of dues of Duty of Excise, Duty of Customs and Income Tax
which have not been deposited as on 31st March 2015 on account of
disputes are given below:
Sl. Name of Statute Nature of Amount not paid/ (Amount
No. Dues involved in dispute)
1 Central Excise
Act, 1944 Excise Duty 25,69,007
(25,69,007)
NIL (20,00,000)
2 Customs Act, 1964 Custom Duty 1,00,00,000
(2,40,07,856)
3 Income Tax Act, 1961 Income Tax 13,91,515
(26,20,804)
8,79,93,920
(8,79,93,920)
Name of Statute Period to Forum where
which it relates dispute is pending
Central Excise 2008-09 Appellate Additional
Act,1944 Various Years Commissioner - Hyd
Customs Act,1964 2008-09 Supreme Court of
India
Income Tax Act,1961 2008-09 ITAT - Hyd
2012-13 CIT Appeals
Figures in brackets are the amounts involved in dispute. The taxes paid
against the above disputes at X 1,63,53,076 are shown under heads Taxes
paid under protest in Long Term Advances and Income Tax Receivable
under other current assets.
d) In our opinion, the amount required to be transferred to the
investor education and protection fund in accordance with relevant
provisions of the Companies Act, 1956 and rules made there under has
been transferred to such fund within time.
viii. The Company has no accumulated losses at the end of the financial
year and it has not incurred cash loss during the year covered by audit
and in the immediately preceding financial year.
ix. According to the records of the Company examined by us and the
information and explanations given to us, the company has not defaulted
in repayment of dues to any financial institution or bank or debenture
holders, as applicable, as at the Balance sheet date.
x. The Company has not given any guarantee for loans taken by others
from bank or financial institutions.
xi. In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purposes for
which they were obtained.
xii. During the course of our examination of the books and records of
the Company, carried out in accordance with the Generally Accepted
Accounting Practice in India and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company noticed or reported during the year, nor
have we been informed of such case by the management.
For Sekhar & Co.,
Chartered Accountants
FRN: 003695-S
G. Ganesh
Place : Secunderabad Partner
Date : 30-May-2015 M.No.: 211704
Mar 31, 2014
We have audited the accompanying Financial Statements of Bhagyanagar
India Limited ("the Company"), which comprise the Balance Sheet as at
31st March 2014, and the Statement of Profit and Loss and Cash Flow
Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
The Company''s Management is responsible for the preparation of these
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 Standards referred to in sub-section
(3C) of section 211 of the Companies Act, 1956 ("the Act") read with
the General Circular 15/2013 dated 13th September 2013 of the Ministry
of Corporate Affairs in respect of Section 133 of Companies Act, 2013
and in accordance with the accounting principles generally accepted in
India. This responsibility includes the design, implementation and
maintenance of internal control 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.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. 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 disclosures in the financial statements. The
proceduresselected depend on the auditor''s 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 control relevant to the
Company''s preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the
circumstances, but not for the purposes of expressing an opinion on the
effectiveness of the Company''s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of the accounting estimates made by the management 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 of our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the 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:
a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2014
b) in the case of Statement of Profit and Loss, the PROFITof the
Company for the year ended on that date; and
c) in the case of the Cash Flow Statement the cash flows of the Company
for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of the
audit;
b. in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books
c. the Balance sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account.
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and
Cash Flow Statement comply with the Accounting Standards referred to in
sub- section (3C) of section 211 of the Act read with the General
Circular 15/2013 dated 13th September 2013 of the Ministry of Company
Affairs in respect of Section 133 of the Companies Act 2013; and
e. on the basis of written representations received from the directors
as on March 31, 2014 and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Act.
ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT
Annexure referred to in paragraph 1 of our report of even date
Re: Bhagyanagar India Limited
i. a) The Company has maintained proper records showing full particular
including quantitative details and situation of fixed assets on the
basis of available information.
b) As Explained to us, a substantial portion of the fixed assets have
been physically verified by the management during the year, which in
our opinion is reasonable, having regard to the size of the company and
nature of its assets. According to information and explanations given
to us, no material discrepancies have been found on such verification.
c) In our opinion, the company has not disposed of a substantial part
of its fixed assets during the year and the going concern status of the
company is not effected.
ii. a) The inventories have been physically verified during the year by
the management. In our opinion the frequency of such verification is
reasonable.
b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the company and nature of its business.
c) The Company is maintaining proper records of inventory and no
material discrepancies were noticed on physical verification.
iii. a) The Company has during the year granted loans to Six Companies
covered in the register maintained under Section 301 of the Act. The
maximum amount involved during the year is Rs. 123,94,81,400and year
end outstanding is Rs. 121,41,13,110.
b) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions of
such loans are not prima facie prejudicial to the interest of the
company.
c) Theprincipal and interest wherever due have been paid and there are
no outstanding amounts at the end of the year.
d) There are no overdue amounts in excess of Rs. 1 Lakh in respect of
loans granted to companies, firms or other parties listed in the
register maintained under section 301 of the Act.
e) The Company has not taken any loansduring the year from companies,
firms or other parties covered under the register maintained under
section 301 of the Act. Consequently the requirement of sub clauses
3(f) and (g) of paragarph 4 of the order are not applicable.
iv. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and nature of its business with regards to
purchase of inventories and fixed assets and with regard to sale of
goods and services. We have not observed any major weakness in the
internal control system during the course of audit.
v. a) According to the information and
explanations given to us, we are of the opinion that the particulars of
all contracts or arrangements that need to be entered into the register
maintained under section 301 of the Act have been so entered.
b) In respect of transactions made in pursuance of such contracts or
arrangements exceeding the value of Rs. Five Lakhs entered into during
the financial year, because of the unique and specialized nature of the
items involved and absence of any comparable transactions, we are
unable to comment whether the transactions were made at prevailing
market prices at the relevant time.
vi. According to the information and explanations given to us the
Company has not accepted any deposits from the public. Therefore, the
provisions of clause (vi) of paragraph 4 of the order are not
applicable to the Company.
vii. In our opinion, theCompany has an internal audit system
commensurate with the size and nature its of business.
viii. We have broadly reviewed the cost records maintained by the
Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under Section 209(1) (d) of the
Act and are of the opinion that prima facie the prescribed accounts and
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.
ix. a) The Company is generally regular in depositing with appropriate
authoritiesundisputed statutory dues including provident fund, investor
education and protection fund, employee''s state insurance, income tax,
sales tax, wealth tax, service tax, custom duty, excise duty and any
other material statutory dues applicable to it.
According to the information and explanations given to us, no
undisputed amounts payable in respect of aforesaid dues in paragraph
(a) above were in arrears as at 31st March 2014 for a period more than
six months from the date they became payable.
b) Details of dues of Central Excise Duty, Custom Duty and Income Tax
which have not been deposited as on 31st March 2014 on account of
disputes are given below.
Sl. Name of Statute Nature of dues Amount not paid/
No. (Amount involved
in dispute)
1 Central Excise Excise Duty 25,69,007
Act 1944 (25,69,007)
Excise Duty NIL
(20,00,000)
2 Customs Act 1964 Custom Duty 1,00,00,000
(2,40,07,856)
3 Income Tax Act 1961 Income Tax 1,12,88,044
(1,12,88,044)
6,01,446
(58,30,735)
18,44,276
(49,44,276)
Sl. Period which it Forum where
No. relates dispute is
pending
1 2008-09 Appellate
Additional
Commissioner-Hyd
Various years
2 2008-09 Supreme Court
of India
3 2007-08 CIT Appeals
2008-09 ITAT-Hyd
2009-10 ITAT-Hyd
Figures in brackets are the amounts involved in dispute. The taxes paid
against the above disputes at Rs. 2,43,37,345 are shown under heads
Taxes Paid under protest in Long Term Advances and Income Tax
Receivable under other current assets.
x. The Company has no accumulated losses at the end of the financial
year and it has not incurred cash loss during the year covered by audit
and in the immediately preceding financial year.
xi. According to the records of the Company examined by us and the
information and explanations given to us, the company has not defaulted
in repayment of dues to any financial institution or bank or debenture
holders, as applicable, as at the Balance sheet date.
xii. Based on our examination of documents and records, we are of the
opinion that the company has maintained adequate records, where the
Company has granted loans and advances on the basis of security by way
of pledge of shares and other securities.
xiii. The company is not a Chit Fund or a Nidhi Mutual benefit
Fund/Society. Therefore the provisions of 4(xiii) of the Order are not
applicable to the Company.
xiv. In our opinion and according to the information and explanations
given to us the Company is not dealing in or trading in securities.
The Company has invested surplus funds in mutual funds. According to
the information and explanations given to us, proper records have been
made of the transactions and contracts and timely entries have been
made therein. The investment in Mutual Funds have been held by the
Company in its own name.
xv. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
xvi. In our opinion and according to the information and explanations
givento us the term loans have been applied for the purposes or which
they are obtained.
xvii. In our opinion and according to the information and explanations
given to us, and on overall examination of the Balance Sheet and the
Cash Flow of the Company, we report that no funds raised on short-term
basis have been used for long term investment.
xviii. The Company has not made preferential allotment of shares to
companies / firms parties covered in the register maintained under
Section 301 of the Act.
xix. The Company has not issued any debentures or securities on which
charge is to be created during the year.
xx. The Company has not raised any money by through public issue during
the year.
xxi. We have not come across any instance of fraud on or by the company
during the year during the course of our examination of the books and
records of the Company, carried out in accordance with the Generally
Accepted Accounting Practice in India and according to the information
and explanations given to us.
For Sekhar & Co.
Chartered Accountants
Firm Registration No : 003695-S
G. Ganesh
Place: Secunderabad (Partner)
Date : 12th May, 2014 Membership No : 211704
Mar 31, 2013
Report on the Financial Statements
We have audited the accompanying financial statements of Bhagyanagar
India Limited ("the Company"), which comprise the Balance sheet as at
March 31, 2013, the Statement of Profit and Loss and Cash Flow for the
year then ended and a summary of significant accounting policies and
other explanatory information.
Management''s Responsibility for the Financial Statements
The management is responsible for preparation of these financial
statement that give a true and fair view of the financial position,
financial performance and cash flows of the company in accordance with
Accounting Standards referred to in sub-section (3C) of Section 211 of
the Companies Act, 1956 (''the Act''). This responsibility includes
design, implementation and maintenance of internal control 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.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards in Auditing issued by the Institute of Chartered
Accountants of India. 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 disclosures in the financial statements. The Procedures
selected depend on the auditor''s judgment, including the assessment of
risks of material misstatement of the financial statements, whether due
to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
reasonableness of the accounting estimates made by management, 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.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the 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:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013;
(b) in the case of the Profit and Loss Account, of the profit for the
year on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act we report that:
a. we have obtained all the information and explanations which to the
best of 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 the Company so far as appears from our examination of those
books
c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account
d. in our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement comply with the Accounting Standards referred
to in subsection (3C) of section 211 of the Companies Act, 1956;
e. on the basis of written representations received from the directors
as on March 31, 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
The Annexure referred to in the Independent auditors'' report to the
members of Bhagyanagar India Limited ("the Company"), on the financial
statements for the period ended 31st March 2013, we report that:
1) Fixed Assets
a) The Company has maintained proper records showing full particulars,
including quantitative details of fixed assets
b) The Company has conducted physical verification of fixed assets
during the year. In our opinion, this physical verification is
reasonable, having regard to the size of the Company and nature of its
assets. No material discrepancies were noticed on such verification.
c) During the period, the Company has discarded certain items of its
fixed assets. In our opinion and according the information and
explanations given to us, the aforesaid disposal has not affected the
going concern assumption.
2) Inventories
a) The inventories have been physically verified by the company during
the period. In our opinion the frequency of such verification is
reasonable.
b) The procedures for the physical verification of Inventories followed
by the management are reasonable and adequate to the size of the
Company and nature of its business.
c) The company is maintaining proper records of inventory. The
discrepancies noticed on physical verification between physical stocks
and the book records are not material.
3) Loans to and from Parties (Companies, firms or such other parties)
listed in the register maintained under section 301 of the Act, hence
forth referred to as parties, amounts in Rupees.
a) The company has granted loans which are not secured to "8" (Eight)
parties during the year. The Maximum amount involved is Rs. 144,75,52,168
and the yearend outstanding is Rs. 1,00,90,98,326. The yearend
outstanding of the loan includes interest accrued for the year under
review Rs. 3,00,85,597.
b) The Loans to wholly owned subsidiaries are given free of interest
and without any specific terms of repayment. Loans other than wholly
owned subsidiaries carry Interest at the rates specified in Section
372A of Companies Act 1956, which is debited to loan account as stated
in ''a'' above. However keeping in view the investment and amount
involved we are of opinion, the rate of interest and other terms and
conditions of such loan are not, prima facie, prejudicial to the
interest of the Company.
c) There is no stipulation of repayment of principal is payable on
commencement of commercial activity by the subsidiary, while interest
is payable annually at the discretion of the Company, pending which it
has been added to principal.
d) In respect of the said loans and interest thereon, there are no
overdue accounts.
e) The company has not taken any loan from parties listed in the
register maintained under section 301 of the Act. Hence we have nothing
to report on sub-clauses (e) to (g) of clause 3 of the order.
4) Internal Control: In our opinion and according to the information
and explanations given to us, there is adequate internal control system
commensurate with the size of the company and nature of its business
with regard to purchase of inventories and fixed assets and with regard
to sale of goods and services. We have not observed any major weakness
in the internal control system during the course of audit.
5) Arrangement & Transactions with parties covered under Section 301 of
the Act.
a) In our opinion and according to the information and explanations
given to us, the particulars of contracts or arrangements referred to
in section 301 of the act have been entered in the register required to
be maintained under that section.
b) In our opinion and according to the information and explanations
given to us, the transactions in pursuance of contracts and
arrangements referred to in (a) above and exceeding the value of Rs. 5
Lakhs, for goods and services for which suitable alternative sources
are not available to obtain comparable quotations. Hence it is not
possible for us to comment whether above contracts and arrangements
have been made at prices which are reasonable having regard to the
prevailing market prices at the relevant time.
6) Deposits from Public: In our opinion, and according to the
information and explanations given to us, the company has not accepted
any deposits covered under Section 58A and 58AA of the Act.
7) Internal Audit: In our opinion the Company has an internal audit
system commensurate with the size and nature of its business.
8) Cost Records: We have broadly reviewed the books of account
maintained by the company pursuant to the rules prescribed by the
Central Government for maintenance of cost records under Section 209(1)
(d) of the Act in respect of products sold by the Company and are of
the opinion that prima facie, the prescribed accounts and records have
been maintained. However, we have not made a detailed examination of
the records.
9) Statutory Dues:
a) According to the information and explanations given to us and on the
basis 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, Income tax, Sales Tax,
Wealth Tax, Customs Duty, Excise duty, Investor Education and
Protection Fund, Service tax, Cess and material statutory dues have
been deposited regularly but for some minor delays during the year by
the company with the appropriate authorities.
There were no dues on account of Cess under Section 441A of the Act
since the aforesaid Section comes into force has not yet been notified
by the Central Government.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident
Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax,
Custom duty, Excise duty, Investor Education and Protection Fund,
Service Tax, Cess and other material statutory dues which were in
arrears as at March 31, 2013 for a period more than six months from the
date they became payable.
b) According to the information and explanations give to us, there are
no dues in respect of Income Tax, Sales Tax, Service Tax, Excise Duty
and such other taxes as detailed have not been deposited with
appropriate authorities on account of disputes. According to the
information and explanations given to us there are no other amounts not
deposited with appropriate authorities on account of dispute.
10) Accumulated Losses & Cash Loss: As on date of Balance Sheet there
are no accumulated Losses and the company has not incurred any cash
loss during the year or the immediately preceding financial year.
11) Dues to Banks and Financial Institutions:
In our opinion and according to the information and explanations given
to us, the company has not defaulted in repayment of dues to its
bankers or to any financial institutions. The Company did not have any
outstanding debentures at the end of the year.
12) Loans on Security of Shares, debentures and other Securities: The
Company has maintained adequate records for the loans granted loans and
advances on the basis of security of shares and properties.
13) Nidhi chit fund Companies: In our opinion and according to the
information and explanations given to us the company is not a nidhi /
mutual benefit fund / society.
14) Dealing in / Trading in Securities: According to the information
and explanations given to us, the company is not dealing or trading in
shares, securities, debentures and other investments.
15) Guarantees on behalf of others: In our opinion, the terms and
conditions on which the company has given guarantee for loans taken by
others from banks or financial institutions are not prejudicial to the
interest of the company.
16) Usage of Term Loans: In our opinion the term loans raised during
the year are applied for the purpose they are raise.
17) Usage of Short Term Funds: According to the information and
explanations given to us and on an overall examination of the balance
sheet of the Company, we report that funds raised on short term basis
have not been used for long term investment.
18) Preferential allotments: The Company has not made any preferential
allotment of shares to companies / firms / parties covered in the
register maintained under Section 301 of the Act.
19) Debentures: The Company did not have any outstanding debentures
during the year.
20) Public Issue: The Company has not raised any money by public issues
during the year.
21) Fraud: According to the information and explanations given to us,
the company has noticed and reported a fraud amounting to Rs. 22,61,464
by a customer. Investigation relating to this case is under progress.
According to the information and explanations given to us, and during
the course of examination of the books and records of the Company,
carried out in accordance with the Generally Accepted Auditing Practice
in India, no fraud by the Company has been noticed or reported during
the year.
For Sekhar & Co.
Chartered Accountants
Firm Registration No: 003695-S
G. Ganesh
Place :Secunderabad (Partner)
Date : 06.05.2013 Membership No: 211704
Mar 31, 2012
1. We have audited the attached Balance Sheet of Bhagyanagar India
Limited as at March 31,2012, the Profit and Loss Account and the Cash
flow statement for the year ended on that date and annexed thereto.
These Financial Statements are the responsibility of the Management.
Our Responsibility is to express an opinion on these financial
statements based on our audit.
2. We have conducted our audit in accordance with the Auditing
Standards generally accepted in India. Those Standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003 (hence
forth referred to as the "Order" issued by the Central Government of
India in terms of sub-section (4A) of Section 227 of the Companies Act,
1956, (hence forth referred to as the "Act", we enclose in the Annexure
a statement on the matters specified in paragraphs 4 and 5 of the said
Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above we report that :
a. We have 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 appears from our examination of
those books;
c. the Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
d. in our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report are in compliance with
Accounting Standards referred to in sub-section (3C) of Section 211 of
the "Act".
e. on the basis of written representations received from the Directors
as on March 31, 2012 and taken on record by the Board of Directors, we
report that none of the Directors is disqualified as on March 31,2012
from being appointed as a director in terms of clause (g) of sub-
section (1) of Section 274 of the "Act".
f. in our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with the
Significant Accounting Policies and notes thereon 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.
i. in case of Balance Sheet, of the state of affairs of the Company as
at March 31, 2012;
ii. in case of Profit and Loss Account, the profit / loss for the year
ended on that date; and
iii. in case of Cash Flow Statement, of the cash flows for the year
ended on that date.
ANNEXURE TO THE AUDITORS' REPORT
The Annexure referred to in the auditors' report to the members of
Bhagyanagar India Limited Limited ("the Company"), on the financial
statements for the period ended 31st March 2012, we report that:
1) Fixed Assets
a) The Company has maintained proper records showing full particulars,
including quantitative details of fixed assets
b) The Company has conducted physical verification of fixed assets
during the year. In our opinion, this physical verification is
reasonable, having regard to the size of the Company and nature of its
assets. No material discrepancies were noticed on such verification.
c) During the period, the Company has discarded certain items of its
fixed assets. In our opinion and according the information and
explanations given to us, the aforesaid disposal has not affected the
going concern assumption.
2) Inventories
a) The inventories have been physically verified by the company during
the period. In our opinion the frequency of such verification is
reasonable.
b) The procedures for the physical verification of Inventories followed
by the management are reasonable and adequate to the size of the
Company and nature of its business.
c) The company is maintaining proper records of inventory. The
discrepancies noticed on physical verification between physical stocks
and the book records are not material.
3) Loans to and from Parties (Companies, firms or such other parties)
listed in the register maintained under section 301 of the Act, hence
forth referred to as "parties", amounts in Lakhs of Rupees.
a) The company has granted loans which are not secured to 9 parties
comprising
of "4" subsidiaries, "3" Associate Companies "2" group companies,
during. The Maximum amount involved and the year end outstanding are Rs.
121.64 Crores, which includes interest accrued of Rs. 7.95 Crores
b) In our opinion, the rate of interest and other terms and conditions
of such loan are not, prima facie, prejudicial to the interest of the
Company.
c) In Case of 2 subsidiaries and 1 associate the interest amounting to
Rs. 7.95 Crores which has become due and is at the year end, this has
been added to the principal. The loans are given without any specific
term of repayment of principal. In respect of others interest has been
received.
d) The Loans are not due for repayment, having been given without any
specific terms of repayment as stated above the question of overdue
principal does not arise. In respect of 3 parties interest aggregating
to Rs. 7.95 Crores was due and outstanding at year end has been added to
the principal on accrual.
e) In respect of Loans taken by the company from 2 parties the maximum
amount involved and the year end outstanding are Rs. 5.92 Lacs and Rs. Nil
respectively.
f) In our opinion the terms of interest and other terms and conditions
on which the loan has been taken from such parties are not prima facie
prejudicial to the interest of the Company.
g) The Loan being interest free the matter of payment of interest does
not arise and the Loan has been repaid in full during the year.
4) Internal Control : In our opinion and according to the information
and explanations given to us, there is adequate internal control system
commensurate with the size of the company and nature of its business
with regard to purchase of inventories and fixed assets and with regard
to sale of goods and services. We have not observed any major weakness
in the internal control system during the course of audit.
5) Arrangement &/ Transactions with parties covered under Section 301
of the Act.
a) In our opinion and according to the information and explanations
given to us, the particulars of contracts or arrangements referred to
in section 301 of the act have been entered in the register required to
be maintained under that section.
b) In respect of transactions made in pursuance of such contracts or
arrangements exceeding the value of Rupees five lakhs entered into
during the financial year, because of the unique and specialized nature
of the items involved and absence of comparable prices, we are unable
to comment whether the transactions were made at prevailing market
prices at relevant time.
6) Deposits from Public : In our opinion, and according to the
information and explanations given to us, the company has not accepted
any deposits covered under Section 58A and 58AA of the Act.
7) Internal Audit : In our opinion the Company has an internal audit
system commensurate with the size and nature of its business.
8) Cost Records : We have broadly reviewed the books of account
maintained by the company pursuant to the rules prescribed by the
Central Government for maintenance of cost records under Section 209(1)
(d) of the Act in respect of products sold by the Company and are of
the opinion that prima facie, the prescribed accounts and records have
been maintained. However, we have not made a detailed examination of
the records.
9) Statutory Dues :
a) According to the information and explanations given to us and on the
basis 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, Income tax, Sales Tax,
Wealth Tax, Customs Duty, Excise duty, Investor Education and
Protection Fund, Service tax, Cess and material statutory dues have
been deposited regularly but for some minor delays during the year by
the company with the appropriate authorities.
b) According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees'
State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom duty, Excise
duty, Investor Education and Protection Fund, Service Tax, Cess and
other material statutory dues which were in arrears as at March 31,
2012 for a period more than six months from the date they became
payable.
c) According to the information and explanations give to us, the dues
set out in "Appendix - I" in respect of Income Tax, Sales Tax, Service
Tax, Excise Duty and such other taxes as detailed have not been
deposited with appropriate authorities on account of disputes.
According to the information and explanations given to us there are no
other amounts not deposited with appropriate authorities on account of
dispute.
10) Accumulated Losses & Cash Loss : As on date of Balance Sheet there
are no accumulated Losses and the company has not incurred any cash
loss during the year or the immediately preceding financial year.
11) Dues to Banks and Financial Institutions :
In our opinion and according to the information and explanations given
to us, the company has not defaulted in repayment of dues to its
bankers or to any financial institutions. The Company did not have any
outstanding debentures at the end of the year.
12) Loans on Security of Shares, debentures and other Securities : The
Company has maintained adequate records for the loans granted loans and
advances on the basis of security of shares and properties.
13) Nidhi chit fund Companies : In our opinion and according to the
information and explanations given to us the company is not a nidhi /
mutual benefit fund / society.
14) Dealing in / Trading in Securities :
According to the information and explanations given to us, the company
is not dealing or trading in shares, securities, debentures and other
investments.
15) Guarantees on behalf of others : In our opinion, the terms and
conditions on which the company has given guarantee for loans taken by
others from banks or financial institutions are not prejudicial to the
interest of the company.
16) Usage of Term Loans : In our opinion the term loans raised during
the year are applied for the purpose they are raise.
17) Usage of Short Term Funds : According to the information and
explanations given to us and on an overall examination of the balance
sheet of the Company, we report that funds raised on short term basis
have not been used for long term investment.
18) Preferential allotments : The Company has not made any preferential
allotment of shares to companies / firms / parties covered in the
register maintained under Section 301 of the Act.
19) Debentures : The Company did not have any outstanding debentures
during the year.
20) Public Issue : The Company has not raised any money by public
issues during the year.
21) Fraud : According to the information and explanations given to us,
no material fraud on the Company has been noticed or reported during
the course of the Audit.
APPENDIX-I as referred to in Para ix(c) of Auditors Report of
Bhagyanagar India Limited
Name of the Nature of the Amount Period to
dues which Forum where
the
Statute in Rs. it relates dispute is
pending
Income Tax Income Tax 49,44,276 2009-10 CIT Appeals
HYD
Act 1956
Custom and Excise Duty on
Excise Duty valuation of
CDMA Phones 2,00,00,000 2004-05 Supreme
court of
India
-do- Duty of JFTC
Cables 2,90,000 2006-07 CESTAT Mumbai
-do- Valuation of
Job Works 25,69,007 2007-08 Adl.Commr III
Hyd
For Sekhar & Co.
Chartered Accountants
Firm Regn No : 003695-S
G. Ganesh
Place: Secunderabad Partner
Date : April 30, 2012 Mem. No: 211704
Mar 31, 2011
1. We have audited the attached Balance Sheet of Bhagyanagar India
Limited as at 31st March 2011, the Profit and Loss Account and also the
Cash Flow Statement for the year ended on that date annexed thereto.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on theses
financial statements based on our audit.
2. We conduct our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
3. As required by the Companies (Auditor's Report) Order,2003 as
amended by the Companies (Auditor's Report) (Amendment) Order, 2004
(Together henceforth referred to as the 'Order' issued by the Central
Government of India in terms of sub-section (4A) of Section 227 of the
Companies Act 1956 (henceforth referred to as the 'Act') is given
below.
A. Fixed Assets : Clause 4(i) of the Order
i. The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
ii. We are informed that management has conducted verification of
significant part fixed assets during the course of the year. As per the
information and explanations given to us the discrepancies found on
such verification are not material.
iii. The fixed assets disposed of during the year, in our opinion do
not constitute substantial part of the fixed assets of the Company and
such disposal in our opinion, has not affected the going concern status
of the company.
B. Inventories : Clause 4(ii) of the Order
i. The inventory has been physically verified during the year by the
management. In our opinion the frequency of verification is reasonable.
ii. The procedures of physical verification followed by the management
are reasonable and adequate in relation to the size of the Company and
nature of its business.
iii. The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between physical stocks and books
records were not material.
C. Loans and Advances & Loans against Pledge of Securities (Clauses
4(iii) of 4 (xii) of the Order.
i. The Company has granted loans to '2' Group Companies, '1' Wholly
Owned Subsidiary, '3' Subsidiaries,'4' Associate Companies. The
aggregate of Maximum amount Involved Rs.10,208.55 Lacs and year end
outstanding Rs.9,939.13 Lacs.
ii. In our opinion the terms of interest and other terms and conditions
of the loans given by the company are not 'prima facie' prejudicial to
the interest of the Company.
iii. The parties are regular in payment of interest wherever due as per
the terms and conditions of sanction of loans
iv. There are no overdue amounts in excess of Rs.1 Lakh in respect of
loans granted, to Companies, firms or other parties in the register
maintained under section 301 of the Act.
v. The Company has not taken any loans from Companies / Parties and
other firms covered under section 301 of the Act. Hence we have not
reported on sub- claused f & g of this clause of the 'Order'.
vi. We are of the opinion that the Company is maintaining adequate
records where the Company has granted loans against security of shares,
debentures and other securities.
D. Transactions with parties under section 301 of the Act. Clause 4(v)
of the Order :
i. On the basis of our examination of relevant records and on the basis
of representation of the management , we are of the opinion that the
particulars of all contracts or arrangements that need to be entered
into the register maintained under section 301 of the 'Act' have been
so entered.
ii. The transactions made in pursuance of such contracts or
arrangements have been made at prices reasonable having to the
prevailing market prices at the relevant point of time.
E. Internal Control : Clause 4(iv) of the order
In our opinion and according to the information and explanations given
to us, there exists an adequate internal control system commensurate
with the size of the Company and nature of its business with regard to
purchase of fixed assets and with regard to sale of services. During
the course of our audit, we have not observed any continuing failure to
correct weakness in internal control system of the company.
F. Deposits -Clause 4(vi) of the Order.
During the year the company has not accepted any deposits within the
meaning of section 58A and section 58AA of the 'Act'.
G. Internal Audit - Clause 4(vii) of the Order.
In our opinion, the Company's internal audit system is commensurate
with the size and nature of its business.
H. Cost Records - Clause 4(viii) of the Order
We are informed that the Central Government has not prescribed
maintenance of cost records under section 209(1)d of the 'Act', for the
manufacturing activities carried on by the Company during the year.
I. Statutory Payments - Clause 4(ix) of the Order.
i. According to the records of the Company, apart from the certain
instances of delays in depositing undisputed income tax deducted at
source, Employee's State Insurance, Provident Fund and Sales tax, the
Company has been regular in depositing undisputed statutory dues
including Provident Fund, Employee State Insurance, Income Tax, Sales
Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory
dues with appropriate authorities. Based on our audit procedures and
according to the information and explanations given to us, there are no
arrears of statutory dues which has remained outstanding as at 31st
March 2011 for a period of more than six months from the date they
became payable. ii. According to the information and explanations
given to us and records of the company the dues of sales tax / income
tax / customs duty / wealth tax / service tax / excise duty / cess,
which have not been deposited on account of any dispute are as follows.
Nature of Dues/ Amount Forum where
Financial Year to in Rs dispute is
which dispute is pending
related to
Custom Duty 200 Lacs Supreme Court
2004-05 of India
Excise Duty 2.90 Lacs CESTAT
2006-07 Mumbai
Excise Duty 25.69 Lacs Asst
2005-08 Commissioner
III Hyd
J. Losses : Clause 4(x) of the order
The Company does not have any accumulated losses as at 31st March 2011.
The Company has not incurred any cash losses during the financial year
covered by our audit and the immediately preceding financial year.
K. Utilisation of Funds : Clause 4(xi), (xvi) & (xvii)
i. The Company has not obtained any term loan during the year.
ii. On the basis of review of utilisation of funds, which is based on
overall examination of the Balance Sheet of the Company, related
information made available to us and as represented to us by the
management, funds raised on short term basis have not been used for
long term investments.
iii. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to a
financial institution, bank or debenture holders.
L. Miscellaneous : Clauses 4(xiii) to (xv) and (xviii) to (xxi)
i. The Company has not given any Guarantees for loans taken by others
from Banks or Financial Institutions.
ii. The Company is not a chit fund, nidhi / mutual benefit fund and
therefore, requirements to such class of Companies are not applicable.
iii. The Company is not dealing in or trading in shares, securities
debentures and other investments.
iv. The Company has not made any preferential allotment of shares
during under Section 301 of the 'Act'.
v. The Company has not issued any debentures during the year.
vi. The Company has not raised any money by way of public issue during
the year
vii. Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements as the
information, representation and explanations given by the management,
we report that no fraud on or by the company has been noticed or
reported during the course of our audit.
4. Further to our comments above :
i. We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of
audit;
ii. In our opinion proper books of account as required by law have been
kept by the Company as far as appears from our examination of those
books;
iii. The Balance Sheet, Profit and Loss Account and Cash flow statement
dealt with by this report are in agreement with the Books of Account.
iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report comply with Accounting
Standards referred to in Section 211(3C) of the 'Act'.
v. On the basis of written representations received from the Directors,
as on 31st March 2011 and taken on record by the Board of Directors, we
report that none of the Directors are disqualified as on 31st March
2011 from being appointed as a Director in terms of Section 274(1)(g)
of the 'Act'.
vi. Without qualifying we invite your attention to:
1. Note 3 : Notes to Accounts wherein it is stated that the Company has
a commitment towards the remaining FCCB bondholders to pay 8% half
yearly compounded yield-to-maturity (YTM), in case the option of
conversion is not exercised by them, within 5 years from the date of
issue of the Bonds. The YTM accrues to the Bond-holders only at the
time of repayment. Contingent liability on account of YTM is Rs 2063.63
lacs as on 31.03.2011 including withholding Tax @ 10%. This will
undergo a change in accordance to the currency conversion rates and
Income tax rates prevailing on the date of repayment if it is made on
non-conversion
2. Note 13 Notes to Accounts : During the year 2009-10, the Company
paid an advance of Rs 214.22 lacs to M/s United International Shipping
Agent (T) Ltd, Tanzania, towards part payment for cost of Copper
cathode which is principal raw material for the copper manufacturing
units. The payment thus made was disclosed as advances to suppliers
under Schedule-11 of "Loans & Advances". However, Copper was stolen
and replaced with worthless material on the sea-way. The Company
lodged claims with Insurance Company and the shipping agent. The
Insurance Company has rejected the claim during the year in the month
of October 2010. On the basis of legal opinion received and on the
recommendations of the Board of Directors the amount is written off as
irrecoverable business loss.
vii. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts, together with the
Notes thereon and attached thereto, give in the prescribed manner, the
information required by the 'Act' , and also give a true and fair view
in conformity with accounting principles generally accepted in India.
1. In the case of Balance Sheet, the state of affairs of the Company
as at 31st March 2011.
2. In the case of Profit and Loss account the 'Profit' for the year
ended on that date.
3. In the case of cash flow statement the Cash flows for the year
ended on that date.
For Sekhar & Co.
Chartered Accountants
Firm Regn No : 003695-S
G. Ganesh
Place: Secunderabad Partner
Date : April 29, 2011 Mem. No: 211704
Mar 31, 2010
1. We have audited the attached Balance Sheet of Bhagyanagar India
Limited as at March 31, 2010 and also the Profit & Loss Account and the
Cash Flow Statement for the year ended on that date annexed thereto
which we have signed under reference to this report. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements
based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. These Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining on test basis, evidence supporting the amounts as
disclosures in the financial statements. An audit also includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
3. As required by Companies (Auditors Report) Order, 2003 (as
amended) (henceforth referred to as the Order) issued by the Central
Government of India in terms of sub-section (4A) of section 227, of the
Companies Act,1956, (henceforth referred to as the Act), we enclose in
the annexure a statement on the matters specified in paragraphs 4 and 5
of the said order.
4. Further to our comments in the annexure referred to above we report
that :
a. We have 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 as far as appears from our examination of
those books. The Balance Sheet , Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books of
account and with the returns from the branches ;
c. In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of section 211 of the Act.
d. On the basis of the written representation received from the
directors, as on March 31 ,2010 and taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
March 31, 2010 from being appointed as a director in terms of clause(g)
of sub- section (1) of section 274 of the Act.
e. Without qualifying our opinion, we draw your attention of
shareholders and stakeholders to the following :
i. Note 3 of Schedule 21 B - Notes to Accounts to the Financial
Statements: The management is of the view that the liability to pay
premium on redemption is contingent, the ultimate outcome of that
matter cannot be presently determined and no provision for any
liability that may result in future including creation of Reserve for
redemption has been made in financial statements. These bonds are due
for repayment in October 2011 at a premium as per the terms of issue of
bonds.
ii. Note 17 of Schedule 21 B : Sundry Debtors and other Balances:
Advances to suppliers under Schedule - 11 "Loans & Advances" include
Rs.214.22 Lakhs Paid to M/s. United International Shipping Agent (T)
Ltd, towards Cost of copper Cathode. However, copper was stolen and
replaced with worthless material on the sea-way. The company has lodged
claim with Insurance Company which is under process. As the Management
is confident of recovering the entire amount from the Insurance
Company/ Shipping Agent, no provision for loss of goods has been made
in the books of account.
f. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts 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 -
i. In the case of the Balance Sheet , of the state of affairs of the
company as at March 31, 2010;
ii. In the case of the Profit and Loss Account, of the profit for the
year ended on that date; and
iii. In the case of Cash Flow Statement, of the cash flows for the year
ended on that date
Annexure referred to in paragraph [3] of our report of even date
Re: Bhagyanagar India Limited
1. a. The Company has maintained adequate records showing full
particulars, including quantitative details of fixed assets.
b. All fixed assets have not been physically verified during the year
but there is a regular program of verification which, in our opinion,
is reasonable having regard to the size of the Company and the nature
of its assets. As informed, no material discrepancies were noticed on
such verification. The company had disposed certain Plant and
machinery and infrastructural assets however this does not effect the
going concern concept of the company.
c. In our opinion, there have been no significant disposals of fixed
assets during the year which affect the going concern assumption.
2. a. The Inventory has been physically verified during
the year by the management. In our opinion, the frequency of
verification is reasonable.
b. The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the company and nature of its business
c. The company is maintaining proper records of inventory. The
discrepancies notices on verification between the physical stocks and
the book records were not material.
3. a. The Company has granted loans to companies
which are wholly / partly owned subsidiaries, associates and a group
company covered in the register maintained under section 301 of the
Act. It involves 1 Wholly owned subsidiary, 1 Group Company, 2 Partly
owned subsidiary, and 6 associate companies. The Maximum amount of Loan
involved is Rs.12,574.74 Lakhs and year end balance is Rs.10,979.80
Lakhs
b. In our opinion and according to the information and explanation
given to us, the rate of interest, where applicable and other terms and
conditions are not prima facie prejudicial to the interest of the
company.
c. The principal and interest wherever due as per the respect of loans
granted to companies, firms or other parties listed in the register
maintained under section 301 of the act.
d. As on 31st March 2010 there are no overdue amounts in excess of
Rs.1 Lakh in respect of loans granted to companies, firms or other
parties listed in the register maintained under section 301 of
Companies Act, 1956.
e. The company has not taken any loans from companies covered in the
register maintained under section 301 of the Act. Hence we are not
required to report on sub-clauses f and g of this clause of the Order.
4. In our opinion and according to the information and explanations
given to us, there exists adequate internal control system commensurate
with the size of the company and the nature of its business with regard
to purchase of inventory, fixed assets and with regard to the sale of
goods and services. During the course of our audit, we have not
observed any continuing failure to correct major weaknesses in internal
control system of the company.
5. a. According to the information and explanations
given to us, by the management, we are of the opinion that the
particulars of all contracts or arrangements that need to be entered
into the register maintained under section 301 of the Act, have been so
entered.
b. In our opinion and according to the information and explanations
given to us, the transactions made in pursuance to contracts or
arrangements entered in the register maintained under section 301 of
the Act, and exceeding rupees five lakhs in respect of any party the
maintenance of Cost during the year have been made at prices which are
reasonable having regard to prevailing market prices at the relevant
time.
6. The Company has not accepted deposits which fall under section 58A
and 58AA of the Act and the rules made there under from the public,
hence we have not reported on the relevant reporting requirements of
the Order.
7. An outside firm of Chartered Accountants has carried out the
Internal Audit of the Company. In our opinion the system of Internal
Audit is commensurate to nature and size of the company and the nature
of its business.
8. We have broadly reviewed the books of account relating to
materials, labour and other items of cost maintained by the company
pursuant to the Rules made by the Central Government for the
maintenance of Cost records maintained under section 209(1) (d) of the
Act, and are of the opinion that prima facie the prescribed accounts
and records are maintained. We have not, however,made a detailed
examination of the records with a view to determine whether they are
accurate or complete.
9. a. The Company is regular in depositing with appropriate authorities
undisputed statutory dues including provident fund, investor education
protection fund, employees state insurance, income tax, sales tax,
wealth tax, service tax, custom duty, excise duty and other material
statutory dues applicable to it.
Further, since Central Government has till date not prescribed the
amount of Cess payable under section 441A of the Act, we are not in a
position to comment upon the regularity or otherwise of the company in
depositing the same.
b. According to the information and explanations given to us and the
records of the company produced before us and examined by us, there are
no dues of wealth tax, service tax, excise duty and Cess, which have
not been deposited on account of any dispute. The particulars of sales
tax, & Customs duty as at 31st March 2010, which has not been deposited
on account of dispute are as follows.
Name of Nature Amount under Accounting Forum where
Year to
the Statue of Dues Dispute yet which Amount dispute is
to be
deposited relates contested
Central Levy of Rs.240.07 2004-05 Supreme
excise and Duty Lakhs Court
Customs Act on certain Incl : Penalty of India
products and Interest
Central Levy of Rs.24.00 Lakhs 2005-2006 CESTAT
Mumbai
excise and Duty
Customs Act on certain
products
Total Rs.264.07 Lakhs
10. The company has no accumulated losses at the end of the financial
year and it has not incurred cash losses in the current and immediately
preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the company has not defaulted in repayment of dues to a
financial institution, bank or debenture holders.
12. We are of the opinion that the company has maintained adequate
records where the company has granted loans and advances on the basis
of security by way of pledge of shares, debentures and other
securities.
13. In our opinion, the company is not a chit fund or a nidhi/mutual
benefit fund/society. Therefore the provisions of clause 4(xiii) of the
Order are not applicable to the company.
14. In our opinion, the company is not dealing in or trading in
shares, securities debentures and other investments. Accordingly the
provisions of the clause 4(xiv) of the Order are not applicable to the
company.
15. According to the information and explanations given to us, the
company has not given guarantees for loans taken by others from bank or
financial institutions, the terms and conditions whereof in our opinion
are prima- facie prejudicial to the interest of the company.
16. Based on information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
were obtained.
17. According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the company, we report
that no funds raised on short term basis have been used for long term
investment.
18. The company has not made preferential allotment of shares to
parties and companies covered in the register maintained under section
301 of the Companies Act, 1956.
19. The Company has not issued any debentures during the year.
20. We have verified that the end use of money raised by issue of
Zero Coupon Convertible Bonds due 2011 is as disclosed in the notes
to the financial statements. (Refer note 4 of schedule 20 B to
financial statements).
21. Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information, representations and explanations given by the
management, we report that no fraud on or by the company has been
noticed or reported during the course of our audit.
For Sekhar & Co.
Chartered Accountants
Firm Regn No : 003695-S
G. Ganesh
Place: Secunderabad Partner
Date: May 29, 2010 Mem. No: 211704
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