| We have audited the accompanying financial statements of Bilpower
Limited ("the Company"), which comprise the Balance Sheet as at March
31,2014, the Statement of Profit and Loss and Cash Flow Statement for
the year ended, and a summary of significant accounting policies and
other explanatory information.
Management's Responsibility for the Financial Statements
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 Principles generally accepted in India including
Accounting Standards referred to in Section 2II(3C) of the Companies
Act, 1956 ("the Act") (which continue to be applicable in respect of
section 133 of the Companies Act, 2013 in terms of general circular
15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs).
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.
Auditors' 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 misstatements.
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 judgement, 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. An audit also
includes evaluating the appropriateness of accounting policies used and
the 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 qualified audit opinion.
Basis for Qualified Opinion
1) With regard to the preparation of financial statements on going
concern
The financial statements of the company have been prepared on a going
concern basis, notwithstanding the fact that its net worth is fully
eroded due to high losses for the financial years 2011-2012, 2012-2013
and 2013-2014. The appropriateness of the said basis is interalia
dependent on the company's ability to infuse requisite funds for
meeting its obligations, rescheduling of debt and resuming normal
operations.
2) With regard to pending confirmation of balances
The company has sent letters to customers in respect of trade
receivables for confirming balances outstanding as at March 31, 2014,
but in most of the cases the customers have not sent written
confirmation confirming the balance outstanding as at March 31, 2014.
In the absence of confirmation any provision to be made for adverse
variation in the carrying amounts of trade receivables is not
quantified.
3) Regarding non provision of Interest on various loans availed from
State Bank of India for the financial year 2013-14
The company has not provided for interest payable to State Bank of
India amounting to Rs. 2341.46 lacs (on various loans from State Bank
of India)for the financial year 2013-2014. The company has also not
made any provision for penal interest claimed by bank. As a result the
loss for the year ended 31st March, 2014 is understated by Rs. 2341.46
Lacs & current liabilities as at 31st March, 2014 are also understated
by Rs. 2341.46 Lacs. The amount of penal interest cannot be quantified
as the details have not been received from the bank.
4) Regarding non provision of demand of Rs. 84.69 Crores received from
State Bank of India in respect of Corporate Guarantee given by the
company in respect of Loan Facilities availed by Bil Energy Systems
Limited
The lender Bank of Bil Energy Systems Limited has pursuant to certain
corporate guarantees given by the company demanded from the company
their dues from Bil Energy Systems Limited amounting to Rs. 84.69
crores. No provision has been made in the accounts for the probable
loss that may arise on account of above demand of Rs. 84.69 crores.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matters
described in the Basis for Qualified Opinion Paragraph, 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:
a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014;
b) in the case of the Statement of Profit and Loss, of the Loss for the
year ended 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 Section
227(4A) of the Companies Act, 1956 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 Companies Act, 1956 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, 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) Except for the effects of the matters described in the Basis for
Qualified Opinion Paragraph, in our opinion, the Balance Sheet, the
Statement of Profit and Loss, and the Cash Flow Statement comply with
the Accounting Standards referred to in Section 2II(3C) of the
Companies Act, 1956; (which continue to be applicable in respect of
section 133 of the Companies Act, 2013 in terms of general circular
15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs)
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 of Section 274(l)(g) of the
Companies Act, 1956.
ANNEXURE TO INDEPENDENT AUDITORS REPORT
Referred to in paragraph 1 under the heading of "Report on Other Legal
and Regulatory Requirements" of our report of even date
1. In respect of fixed assets:
(a) The company is maintaining 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. However such physical report
has not been made available to us during the course of our audit. It is
explained that no material discrepancy has been reportedly noticed on
such verification.
(c) There was no substantial disposal of fixed assets during the year.
2. In respect of inventories:
(a) As explained to us that inventory has been physically verified
during the year by the management. However such physical verification
report has not been made available to us during the course of our
audit. Hence we are unable to comment on the reasonableness of
frequency and procedure of the verification of inventory. However,
inventories have also been audited by independent auditors appointed by
lending banks and also by bank officials from time to time and no
adverse opinion has been given by the said auditors and officials.
(b) The Company has maintained proper book records of inventory.
Packing and sample material and stores and spares purchased are written
off as expenses in the year of purchase.
3. (a) The Company has granted interest free unsecured loans, to four
parties listed in the register maintained under Section 301 of the
Companies Act, 1956.
The maximum amount involved during the year and the year end balance of
such loans aggregate to Rs. 2,91,07,292/- and Rs. 2,44,94,133.31
respectively.
(b) Except for the fact that these loans are interest free, in our
opinion and according to the information and explanations given to us,
the other terms and conditions of loans given are not prima facie
prejudicial to the interest of the Company.
(c) The principal amount is repayable over a period of two years.
(d) In respect of the aforesaid loans, there is no overdue amount.
(e) The Company has taken interest free loans from three parties listed
in the register maintained under Section 301 of the Companies Act,
1956. The maximum amount involved during the year and the year end
balance of such loans aggregate to Rs. 1,54,63,935/- and Rs. Nil
respectively.
(f) The said loans are interest free loans. The other terms and
conditions of loans taken are not prima facie prejudicial to the
interest of the Company.
(g) No stipulations for repayment have been prescribed and as such no
comments regarding regularity of payments are being made.
4. In our opinion, and according to the Information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for sale of goods, keeping
in view the close supervision and authorization by the directors.
During the course of our audit, we have not observed any major
weaknesses in internal control system.
5. In respect of contractor arrangements referred to in section 301 of
the Companies Act, 1956
(a) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of the contracts or
arrangements that need to be entered in the register maintained under
section 301 of the Companies Act, 1956 have been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of the contracts
/arrangements entered in the Register maintained under section 301 of
the Companies Act 1956 and exceeding the value of Rupees Five Lacs in
respect of the each party during the year have been made at prices
which are reasonable having regards to the prevailing market price at
the relevant time.
6. As explained to us, during the year under reference the Company has
not accepted any Deposits from the Public within the meaning of
Provisions of Section 58A and 58AA of the Companies Act, 1956 and the
rules framed thereunder. Therefore, the provision of clause (vi) of the
Companies (Auditor's Report) Order, 2003 (as amended) are not
applicable to the company
7. As explained to us, the Company has an internal audit system
commensurate with the size and nature of its business, however, report
of such internal audit has not been made available to us.
8. 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
Companies Act, 1956 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.
9. a) Undisputed Statutory dues in respect of Service tax, Sales tax,
Profession tax, Tax deducted at source and Wealth Tax have not been
regularly deposited with the appropriate authorities. Undisputed
statutory dues in respect of Provident fund, Customs, Excise Duty, Cess
as applicable have generally been regularly deposited with the
appropriate authorities barring few months.
b) According to the information and explanations given to us:
(i) No amounts were outstanding as at year end on account of undisputed
amounts payable in respect of investor education and protection fund,
customs duty, excise duty and cess, service tax, tax deducted at source
for a period of more than 6 months from the date they became payable.
(ii) Undisputed amounts payable in respect of Sales Tax of Rs.
36,29,813/- (relating to Financial year 2011-12 Rs. 22,11,434/-, &
relating to financial year 2012-13 Rs. 14,18,379/-), Interest on Sales
Tax of Rs. 35,79,380/- (relating to Financial year 2010-11 Rs.
15,82,310/-, relating to financial year 2011-12 Rs. 16,95,665/- &
relating to financial year 2012-13 Rs. 3,01,405/-), Profession Tax Rs.
1,400/- (relating to financial year 2012-13), Professional Tax payable
Rs. 4,000/-(relating to financial year 2012-13 Rs. 3,000/- & relating
to financial year 2013-14 Rs. 1,000/-) Tax on Proposed Dividend of Rs.
17,03,492/- (relating to dividend paid in financial year 2011-12 for
dividend declared pertaining to financial year 2010-11) and Labour
Welfare Fund payable Rs. 24/- (relating to financial year 2012-13 Rs.
6/- & relating to financial year Rs. 18/-) were outstanding for a
period of more than six months from the date they became payable. The
due dates for these amounts are as per the respective statutes.
c) The disputed statutory dues aggregating to Rs. 4442.37 Lacs that
have not been deposited, on account of matters pending before
appropriate authorities are as under :-
Sr. Name of Nature Period for which
No. the Statute of dues the amount relates
1 Central Excise F.Y.2008-09 &
Excise Act Duty F.Y.2009-10
2 Central Excise F.Y.2008-09 &
Excise Act Duty F.Y.2009-10
Maharashtra Value F.Y. 2006-07 &
3 Sales Tax Added Tax and F.Y. 2009-10
Central Sales Tax
Sr. Name of Amt
No. the Statute Forum where dispute is pending (Rs. in Lacs)
1 Central The company's appeal has been
Excise Act dismissed by The Customs Excise
& Service Tax appellate 4071.80
tribunal- Ahmedabad. The company
has informed us that they have
preferred an appeal with Bombay
High Court.
2 Central
Excise Act The Customs Excise & Service Tax
appellate tribunal- Ahmedabad 255.98
3 Sales Tax The Deputy Comm. of Sales Tax
Appeal V, Mumbai 114.59
Total 4442.37
10. The Company's accumulated losses at the end of the financial year
were more than fifty percent of its net worth. The Company has incurred
cash losses in the financial year and in the immediately preceding
financial year.
11. Based on our audit procedures and according to the information and
explanation given to us by the management, the company has defaulted in
repayment of loans and interest to bank. The company has defaulted in
repayment of dues including interest and principal to State Bank of
India, on its various fund factilities availed, outstanding at the year
end amounting to Rs. 180.00 Crores (Previous Year overdue Rs. 0.24
Crores). The unpaid interest provided for in the books of accounts on
the said loans amounts to Rs. 6.85 Crores (Previous Year Rs. 5.04
Crores). Also interest not provided amounting to Rs. 23.42 Crores for
the financial year 2013-14 as stated in note 6.1 (d) of notes to
accounts of Balance Sheet , is remaining unpaid. Entire loans have been
recalled by State Bank Of India during the financial year 2013-2014
12. According to the information and explanations given to us, no
loans & Advances have been granted by the company on the basis of the
securities by way of pledge of shares, debentures and other securities.
13. In our opinion and according to the information and explanations
given to us, the Company is not a chit fund or a nidhi / mutual benefit
fund / society. Therefore, the provision of clause (xiii) of paragraph
4 of the Companies (Auditor's Report) Order, 2003 (as amended) are not
applicable to the Company.
14. In respect of the dealings in shares and other securities, proper
records have been maintained and timely entries have been made therein.
All these securities have been held by the company in its own name.
15. According to the information and explanation given to us the
Company has given guarantee for loans taken by one Associate company
from bank. According to the information & explanation given to us, we
are of the opinion that the terms & conditions thereof are not prima
facie prejudicial to the interest of the company.
16. Based on our audit procedures and on the information given by the
management, we report that the company has not raised any term loans
during the year.
17. Based on the information and explanations given to us and on an
overall examination of the Balance Sheet of the Company as at 31st
March, 2014, we report that no funds raised on short-term basis have
been used for long-term investment by the Company.
18. Based on the audit procedures performed and the information and
explanations given to us by the management, we report that the Company
has not made any preferential allotment of shares during the year.
19. The Company has not raised any money by public issue during the
year.
20. Based on the audit procedures performed and the information and
explanations given to us, we report that no fraud on or by the Company
has been noticed or reported during the year, nor have we been informed
of such case by the management.
For Bansal Bansal & Co.
Chartered Accountants
Firm Regn. No. 100986W
Anand Drolia
Partner
Mumbai, 28th May, 2014 Membership No. 036718
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