bil energy system ltd Auditors report

TO

THE MEMBERS OF

BIT ENERGY SYSTEMS LIMITED,

Report on the Financial Statements

We have audited the accompanying financial statements of BIL ENERGY SYSTEMS LIMITED ("the Company"), which comprise the Balance sheet as at March 31, 2021, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended and a summary of significant accounting policies and othet explanatory information,

Managements Responsibility for the Financial Statements

The Companys Management 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 Indian Accounting Standards specified in the Companies (Accounts) Rules, 2015 (as amended) under Section 133 of tire Act

These responsibilities 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 adequate internal financial control, that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these 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 and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards and pronouncements 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 auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companys preparation of the financial statements that give 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 controls 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 Companys 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 qualified audit opinion on the financial statements.

Basis for Qualified Opinion

Sr Key Audit Matters	Principal Audit Procedures
1. With regard to pending confirmation of balances of trade receivable.
The Company has sent letters to customers in respect of trade receivables for confirming balances as at March 31, 2021, but in most of the cases the customers have not sent written confirmation confirming tire balance outstanding as at March 31, 2021, In the absence of confirmation, any provision to be made for adverse variation in the carrying amounts of trade receivable is not quantified.	The Board considers all outstanding balance of customers as on 31st March, 2021 are subject to provision.
2. With regard to unsecured loans given to party not covered in the register maintained under section 189 of the Companies Act 2013
The Company has sent balance confirmation letters to parties who are not covered in the register maintained under section 189 of the Companies Act, 2013, but in most of the cases the company have not received written confirmation confirming the balance outstanding as at March 31, 2021. Further in respect of loans granted, repayment of the principal amount was not as stipulated and payment of interest has also not been regular.	Company has received balance confirmation from some of the Companies and is vigorously following up with the rest of the borrowers. Company expects to receive balance confirmation from all the companies to whomsoever advances have been given. Efforts are made to regularize arrears and recovery against overdue principal and interest.
3. Regarding non provision of demand of 215.82 Crores received from State Bank of India in respect of Corporate Guarantee given bv the company in respect of Loan Facilities availed bv Bil Power Limited
The lender Bank of Bilpower Limited has pursuant to certain corporate guarantee given by the company demanded from the company their dues from Bilpower Limited amounting to Rs. 215.82 crores. No provision has been made in tire accounts for the probable loss that may arise on account of above demand of if 215.82 crores.	Bilpower Limited, the Borrower in whose favour the Company has given Corporate guarantee to State Bank of India, has informed the Company that they are in negotiation with the Lender Bank for settlement/re-schedulement of dues and hence no provision has been made in the account
4. Regarding non provision of interest on various loans availed from State Bank of India for the financial vear 2020-21
The Company has not provided for interest payable to State Bank of India amounting to Rs. 2099,35 Lacs for year ended 31st March, 2021.	Based on the advice received by the company, it has been decided not to provide any interest on liability of State Bank of India .
Tire company has also not made any provision for penal interest claimed by Bank. As a result the profit for tire year ended 31st March, 2021 is overstated by Rs. 2099.35 Lacs & Current liabilities as at 31st March, 2021 are also understated by Rs. 2099.35 Lacs and also Reserves are overstated by Rs.2099.35 Lacs.
The amount of penal interest cannot be quantified as the details have not been received from the bank. Also for the financial year 2020-21, 2019-20, 2018-19, 2017-18, 2016-17 & 2015-16 the company has not provided for interest payable to State Bank of India amounting to Rs. 10666.80 lacs and as a result the accumulated losses in the Balance Sheet are understated by Rs. 10666.80 lacs upto 31st March, 2021.
5. Loan given includes 34 interest free unsecured loans of Rs. 2136.50/- Lacs
The Company has given 34 Interest free unsecured loans of Rs.2136.50/- Lacs	Management represents that due to COVID-19 led economic instability, the borrowers are going through financial issues and have expressed their inability to pay interest and hence not provided in the books of accounts.
6. With regarding Phvsical verification of Inventory:
The company has not conducted periodic physical verification of inventory at reasonable intervals. In respect of traded stock at Mumbai Head Office, the details of finished goods stock storage location is not available for our verification.	Management had properly observed the inventory at regular intervals.
7. With regarding Non Payment of Statutory Dues:
The company is not regular in paying the Statutory dues regarding Service Tax, GST, Sales tax, Professional Tax etc.	Company had paid the Statutory dues though some of the dues has been delayed because of the financial position

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 tire 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, 2021, and its Balance Sheet, Profit and Loss and cash flows statement for the year ended on that date.

Report on other Legal and Regulatory Requirements

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

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 appears from our examination of those books.

(c) The Balance Sheet, Statement of profit and Loss, and Cash Row 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 comply with the Accounting Standards specified under section 133 of the Act.

(e) On the basis of the written representations received from the directors as on March 31, 2021, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021, from being appointed as a director in terms of Section 164(2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

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

(h) The company has disclosed the impact of pending litigations on its financial position in its financial statements -Refer Note 26 to the financial statements;

(i) The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

(j) There has been no delay in transferring amount, required to be transferred, to the Investors Education and Protection Fund by the Company.

ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT

In the Annexure, as required by the Companies (Auditors Report) Order, 2015 issued by the Central Government in terms of Section 143 (11) of the Companies Act 2013, on the basis of checks, as we considered appropriate, we report on the matters specified in paragraph 3 and 4 of the said order to the extent applicable to the Company.

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) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items over a period of three years which, in out opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.

(c) The title deeds of immovable properties, as disclosed in Note 2 on fixed assets to the financial statements, are held in the name of the Company.

2. In respect of Inventories:

The company has not conducted periodic physical verification of inventory at reasonable intervals. In respect of traded stock at Mumbai Head Office, the details of traded stock storage location not available for our verification.

3. The Company has not granted unsecured loans to any companies covered in the register maintained under Section 189 of the Act.

4. In our opinion, in respect of loans, investments, guarantees and security the provisions of section 185 has been complied & section 186 has not been complied.

5. In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public and therefore, the provisions contained in Sections 73 to 76 of the Act, and Rules framed there under and any directive issued by the Reserve Bank of India are not applicable to the Company.

6. As per information and explanation given by the management, the company has maintained cost records as specified under Section 148(1) of the Act. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

7. According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is genera 11 y irregular in depositing the undisputed statutory dues including Goods and Service Tax, TDS, Sales tax, Professional Tax etc.

(a) Following are the dues which are due since more than six months but still not paid or paid at later dates.

Nature of Statute	Natures of Dues	Amount (Rs. in Lacs)	Period to which the amount relates	Date of Payment
Sales Tax Act	VAT	29.02	F.Y.2011-12	Still not paid
Sales Tax Act	VAT	93.78	F.Y.2012-13	Still not paid
Sales Tax Act	VAT	68.25	F.Y.2013-14	Still not paid
Sales Tax Act	VAT	37.28	F.Y.2014-15	Still not paid
Service Tax Act	TAX	2.53	F.Y. 2017T8	Still not paid
Profession Tax	PT	0.0180	F.Y. 2020-21	Paid on 14 July 2021

b) According to the records of the Company Income-Tax and Sales Tax which have not been deposited on account of disputes and the Forum where the dispute is pending are as under:

Nature of Statute	Fi riancial Year	Nature of Dues Pending	Amount (Rs. in Lacs)	Forum Where Dispute is pending
Sales Tax Act	F.Y. 2010-11	(MVAT) Sates Tax Demands pending in appeals	555.26	Deputy/Joint Commissioner of Sales Tax (Appeal)
	F.Y. 2012-13
	F.Y. 2013-14
	F.Y 2015-16
	F.Y 2016-17
Sales Tax Act	F.Y.2010-11	(CST) Sales Tax Demands pending in appeals	796.45	Deputy/Joint Commissioner of Sales Tax (Appeal)
	F.Y 2011-12
	F.Y.2012-13
	F.Y,2013-14
	F.Y 2015-16
	F.Y 2016-17
Income Tax Act	F.Y. 2011-12	Income Tax Demands including interest which is under dispute and pending in appeals	2.75	CIT APPEAL CPC
	F.Y. 2018-19		352.69

8. Based on our Audit Procedures and as per the information and explanation given by management, the company has defaulted in repayment of dues to banks. The detail of period and amount of default as ascertained by management is as follows:

Name of the Bank	Nature of dues	Amount (Rs. Lacs)	Due Date	Date of Payment
State Bank of India	Cash Credit facility, Over Draft facility and Interest	10666.80	Various Dates	Not paid

9. In our opinion and according to the information and explanations given to us, no term loans raised during the year. The company did not raise any money by way of public offer or further public offer (including debt instruments) during the year.

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

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

12. In opinion and according to information and explanations given to us, the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.

13. According to the information and explanations given to us and based on our examinations of the records of the company, the Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Indian Accounting Standard (IND AS) 24, Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

14. According to the information and explanations given to us and based on our examinations of the records of the company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.

15. According to the information and explanations given to us, the Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.

16. The Company is not required to be registered under Section 45-LA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Oause 3(xvi) of the Order are not applicable to the Company.

ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act

We have audited the internal financial controls over financial reporting of Bil Energy Systems Ltd. ("the Company") as of March 31, 2021 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing deemed to be prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. 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 Tespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of tire internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal Control based on the assessed risk. The procedures selected depend on the auditors judgement, 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 qualified audit opinion on the Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A companys 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 companys 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 companys 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 oveT financial reporting may become inadequate became of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us and based on our audit, the following weaknesses have been identified as at March 31,2021.

a) The Company did not have an appropriate internal audit system.

b) The Company did not have an appropriate internal control system for inventory with regard to periodic verification of stock.

In our opinion, except for the possible effects of the weakness described above the Company has, in all material respects, an adequate interned financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2021, 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 DALAL & KALA ASSOCIATES CHARTERED ACCOUNTANTS

(CA Anand Drolia)

M.No.036718 PARTNER"

Firm Registration No.: 102017W

Place: Mumbai,

Date: 29th June, 2021