| We have audited the accompanying financial statements of BKV INDUSTRIES
LIMITED ("the Company"), which comprise the Balance Sheet as at 31st
March, 2015, the Statement of Profit and Loss, the Cash Flow Statement
for the year then ended, and a summary of the significant accounting
policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to
the preparation 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 maintenance of adequate
accounting records in accordance with the provisions of the Act for
safeguarding of the assets of the Company and for preventing and
detecting frauds and other irregularities; selection and application of
appropriate accounting policies; making judgments and estimates that are
reasonable and prudent; and design, implementation and maintenance of
adequate internal financial controls, that were operating effectively
for ensuring the accuracy and completeness of the accounting records,
relevant to the preparation and presentation of the financial statements
that give a true and fair view and are free from material misstatement,
whether due to fraud or error.
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
thereunder.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the 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 the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on 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 31st March, 2015, and its loss and its cash flows for the year ended
on that date.
Emphasis of Matters
We draw attention to the following matters in the Notes to the
financial statements:
3 a) Note 36 to the financial statements which, describes the
uncertainty related to the outcome of the lawsuit filed relating to the
Non- Agricultural Tax appeal by the Govemment/farms.
b) Note 32 in the financial statements which indicates that the Company
has accumulated losses and its net worth has been substantially eroded,
the Company has incurred a net loss during the current year and a
marginal profit due to exceptional items in the previous year(s) and,
the Company's current liabilities exceeded its current assets as at the
balance sheet date. These conditions indicate the existence of a
material uncertainty that may cast significant doubt about the Company's
ability to continue as a going concern. However, as the Company has got
consistant operating lease income the accounts have been drawn up on
going concern basis.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order, 2015, issued by
the Central Government of India in term of sub-section (11) of section
143 of the Companies Act,2013, we give in the Annexure a statement on
the matters specified in the paragraphs 3 and 4 of the Order, to the
extent applicable.
As required by Section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the infonnation and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit.
(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
those books.
(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.
(d) In our opinion, the aforesaid standalone financial statements
comply with the Accounting Standards specified under Section 133 of the
Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
(e) The going concern matter described in sub-paragraph (b) under the
Emphasis of Matters paragraph above, in our opinion, may have an effect
on the functioning of the Company.
(f) On the basis of the 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 31st March, 2015
from being appointed as a director in terms of Section 164 (2) of the
Act.
(g) With respect to the 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 financial statements - Refer Note 26 to the
financial statements;
ii. The Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses, if any,
and the Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Annexure to the Auditors' Report
The Annexure referred to in our report to the members of BKV Industries
Limited, ('the Company') for the year Ended on 31st March, 2015. We
report
that:
1) In respect of Fixed Assets
a) The company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets on the
basis of available information.
b) We have been informed that all the fixed assets have been physically
verified by the management during the year and to the best of our
knowledge no serious discrepancies have been noticed on such
verification.
2) The company has given its farm on long term lease and carrying on no
other operations hence, no inventory is maintained by the company,
hence the question of physical verification of inventory in the
reasonable intervals does not arise and hence the clause is not
applicable.
3) The company has not granted any loans to companies, firms or other
parties listed in the register maintained under section 189 of the
Companies Act, 2013. Accordingly sub-clauses (a) and (b) of this order
are not applicable.
4) In our opinion and according to the information and explanations
given to us, there are adequate internal control system commensurate
with the size of the company and the nature of its business with regard
to the purchases of inventory, fixed assets and for the sale of goods
and services. During the course of audit, we have not observed any
continuing failure to correct major weakness in internal control
system.
5) According to the information and explanations given to us the
company has not accepted any fixed deposits from the public within the
meaning of section 73 to 76 of the Companies Act, 2013 and the
Companies (Acceptance of Deposits) Rules, 2014. Further, no Order has
been passed by Company Law Board or National Company Law Tribunal or
Reserve Bank of India or any court or any other tribunal. Hence, the
provisions of this are not applicable.
6) 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 148(1) of the
Companies Act, 2013 and are of the opinion that prima facie the
prescribed cost records have been maintained. We have, however, not
made a detailed examination of the cost records with a view to
determine whether they are accurate or complete.
7) a) According to the information and explanations given to us, in our
opinion, the company is regular in depositing undisputed statutory dues
Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise
Duty, Cess and other material statutory dues applicable to it. According
to information and explanations given to us and the opinion sought by
the management, the Provident Fund and ESI are not applicable to this
company. According to the information and explanations given to us, no
undisputed amounts payable in respect of Income-tax, Sales Tax, Wealth
Tax, Service Tax, P.F and ESI, Customs Duty, Excise Duty, and Cess were
in arrears, as at 31st March, 2015 for a period of more than six months
from the date they became payable.
b) According to the information and explanations given to us, there are
no dues of Sales Tax. Income-Tax, Customs Duty, Wealth Tax, Excise,
Service Tax Duty which have not been deposited on account of dispute
and in the case of levy of Non-Agricultural Lands Assessment under
Andhra Pradesh Non-Agricultural Land Assessment Act, the matter is
pending before courts and an amount of Rs. 59.07 lakhs is shown under
contingent liability.
c) The amounts due to Investor Education & Protection Fund for a period
exceeding six months as at 31sl Match, 2015 does not arise as the
company has not declared dividends to the shareholders since its
inception. Hence, this sub-clause is not applicable.
8) The Company has accumulated losses to the extent of Rs. 342.75 lakhs
and the Company reported a cash profit of Rs. 0.69 lakhs during the
financial year 2014-15 and made a cash profit of Rs. 1.76 lakhs during
the financial year 2013-14.
9) The company has no loans from banks or financial institutions nor
issued debentures during the year, hence in our opinion and according
to the information and explanations given to us, this clause is not
applicable to the company.
10) In our opinion and according to the explanations given to us, the
company has not given any guarantees for loans taken by others from
bank and financial institutions. Hence, this clause is not applicable
to the company.
11) In our opinion and according to information and explanations given
to us, the company has not raised any term loans during the year.
Hence, this clause is not applicable to the company.
12) Based on the audit procedures performed for the purposes of
reporting the true and fair view of the financial statements and as per
the information 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 Garlapati & Co,
Chartered Accountants
Firm Regn. No. 000892S
Place: Guntur.
Date : 29th May, 2015 G. Satyanarayana
Partner
M.No:022101
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