BKM Industries Ltd.
|BSE: 539043||Sector: Industrials|
|NSE: BKMINDST||ISIN Code: INE831Q01016|
|BSE 00:00 | 24 Apr||BKM Industries Ltd|
|NSE 05:30 | 01 Jan||BKM Industries Ltd|
BKM Industries Ltd. (BKMINDST) - Auditors Report
Company auditors report
To The Members of BKM Industries Limited (Formerly Known as ManaksiaIndustries Limited)
Report on the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of BKMIndustries Limited ("the Company") which comprise the Balance Sheet as at March31 2019 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year ended on thatdate and a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "the standalone financial statements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019the profit and total comprehensive income changes in equity and its cash flows for theyear ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under section 143(10) of the Act(SAs). Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
Emphasis of Matters
We draw attention to the following notes of the standalone financialstatements. Our opinion is not modified in respect of these matters
1. Note 21 to the standalone financial statements which includesoutstanding statutory dues with regards to Goods and Services Tax (GST) Tax Deducted atSource and Income Tax Payable pending for more than six months:
- Dues towards GST: Rs. 46.99 lakhs starting from May 2018.
- Dues towards TDS: Rs. 95.35 lakhs starting from July 2018.
- Income Tax Liability for the financial year 2017-18 is amounted toRs.135 Lakhs.
2. Note 26 to the standalone financial statements as at the reportingdate the management has reviewed the recoverability of its inventories in hand based ontechnical evaluation and has written-down its inventory as obsolete by Rs. 1928.20 lakhsduring the financial year ended 31st March 2019 which is included in"Changes in Inventories" in the Standalone Statement of Profit and Loss.
3. Note 17 to the standalone financial statements which include loansoutstanding due to irregularity of repayment towards bank loans such loans has beencategorized as 'non performing assets' by banks and the total overdue amount as at 31stMarch 2019 stands at Rs. 8546.00 lakhs.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
We draw attention to the following matters not indicated in thestandalone financial statements. Our opinion is not modified in respect of these matters
As at the reporting date the carrying amount of the net assets of theentity is more than its market capitalization on standalone basis. This provides anindication for occurrence of Impairment Loss in accordance with Ind-AS 36 "Impairmentloss" However based on the formal estimates by the management the recoverable valuewill exceed the carrying amount of the net assets of the company. Hence no impairmentloss recognized in the standalone financial statements.
Information Other than the Standalone Financial Statements andAuditor's Report Thereon
The Company's Board of Directors is responsible for the preparation ofthe other information. The other information comprises the information included in theManagement Discussion and Analysis Board's Report including Annexures to Board's ReportBusiness Responsibility Report Corporate Governance and Shareholder's Information butdoes not include the standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.
If based on the work we have performed we conclude that there is amaterial misstatement of this other information; we are required to report that fact. Wehave nothing to report in this regard.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company'sfinancial reporting process.
Auditor's Responsibilities for the Audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
i. Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
ii. Obtain an understanding of internal financial controls relevant tothe 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 onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
iii. Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
iv. Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
v. Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016(''theOrder'') issued by the Central Government of India in terms of sub-section (11) of section143 of the Companies Act 2013 we give in the 'Annexure A'; a statement on the mattersspecified in the paragraph 3 and 4 of the said 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;
b. in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;
c. the Standalone Balance Sheet Statement of Profit and Loss theStatement of Cash Flows and the Statement of Changes in Equity dealt with by this Reportare in agreement with the books of account;
d. in our opinion the aforesaid standalone financial statements complywith the Indian Accounting Standards (Ind AS) specified under section 133 of the Act readwith relevant rule issued thereunder;
e. on the basis of the written representations received from theDirectors as on 31st March 2019 taken on record by the Board of Directorsnone of the Directors is disqualified as on 31st March 2019 from beingappointed as a Director in terms of section 164 (2) of the Act;
f. with respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in 'Annexure B'; and
g. with respect to the other matters to be included in the Auditor'sReport in accordance with rule 11 of the companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the pending litigations in its financialstatements;
ii. The Company did not have any long- term contracts includingderivative contracts. Accordingly no provisions for material foreseeable losses have beenmade; and
iii. There were no amounts which are required to be transferred to theinvestor education & protection fund by the Company.
For SRB & Associates
Chartered Accountants Firm Registration: No: 310009E
Membership No: 066708 Kolkata 30th May 2019
Annexure-A to the Independent Auditors' Report
(Referred to in paragraph-1 under 'Report on Other Legal &Regulatory Requirements' section of our report of even date)
The Annexure referred to in Independent Auditors' Report to the membersof BKM Industries Limited ("the Company") on the standalone financial statementsfor the year ended 31st March 2019 we report that:
(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of itsfixed assets by which all fixed assets are verified in a phased manner over a period oftwo years. In our opinion this periodicity of physical verification is reasonable havingregard to the size of the company and the nature of its assets. However none of the fixedasset has been physically verified by the management during the period.
(c) As discussed with the Management and according to the informationand explanations given to us the title deed of immovable properties has not been held inthe name of the Company. These Immovable properties details are given bellow: -
(ii) (a) The inventory has been physically verified by the managementduring the year. In our opinion the frequency of such verification is reasonable.
(b) The discrepancies noticed on the aforesaid verification between thephysical stocks and book records were properly dealt in the books of accounts.
Company (Secured/Unsecured Loans) to Companies/ Firms/ LimitedLiability Partnerships or Other Parties covered in the register maintained under section189 of the Act are not prima-facie prejudicial to the interest of the Company.
(b) In respect of the aforesaid loans the parties are repaying theprincipal amounts as stipulated and are also regular in payment of interest whereapplicable.
(c) In respect of the aforesaid loans there is no overdue amount for aperiod exceeding 90 days.
(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of section 185 and 186 of theAct in respect of grant of loans making investments and providing guarantees andsecurities as applicable.
(v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits from public and accordinglyparagraph 3 (v) of the Order is not applicable.
(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules prescribed by the Central Government for maintenance of costrecords under sub-section (1) of section 148 of the Act and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. However we havenot made a detailed examination of the records.
(vii) (a) According to the information and explanations given to us andon the basis of our examination of the records of the Company amounts deducted/accrued inthe books of account in respect of undisputed statutory dues including provident fundemployees' state insurance income-tax sales tax service tax duty of customs duty ofexcise CGST SGST IGST UTGST Value
Added Tax Cess and other material statutory dues have been generallyregularly deposited during the year by the Company with the appropriate authorities exceptthe following
(b) According to the information and explanations given to us thefollowing dues of Excise Duty Service Tax Entry Tax and Other Dues have not beendeposited by the Company on account of disputes:
(viii) In our opinion and according to the information and explanationsgiven to us the Company has defaulted in repayment of dues to any financial institutionsbankers and government or debenture holders during the year
(ix) In our opinion and according to the information and explanationsgiven to us the term loans taken by the Company have been applied for the purpose forwhich they were raised. The Company has not raised any moneys by way of initial publicoffer or further public offer (including debt instruments) during the year.
(x) According to the information and explanations given to us no fraudby the Company or on by its officers or employees has been noticed or reported during thecourse of our audit.
(xi) According to the information and explanations given to usmanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule V to the CompaniesAct.
(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi Company. Accordingly paragraph (xii) of the Orderis not applicable.
(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with section 177 & 188 of the Act where applicable and thedetails of such transactions have been disclosed in the standalone financial statements ofthe Company as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Therefore the provisions of clause 3(xiv) of the Companies(Auditor's Report) Order 2016 are not applicable to the Company.
(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with them. Accordinglyparagraph (xv) of the Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.
For SRB & Associates
Firm Registration: No: 310009E
Membership No: 066708
Kolkata 30th May 2019
Annexure -B to the Independent Auditors' Report
(Referred to in paragraph 2(f) under 'Report on Other Legal &Regulatory Requirements' section of our report of even date)
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financialreporting of BKM Industries Limited ("the Company") as of March 31 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India ('ICAI').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31st March2019 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.
For SRB & Associates
Firm Registration: No: 310009E
Membership No: 066708
Kolkata 30th May 2019