The Members of
BOTHRA METALS AND ALLOYS LIMITED
Report on the audit of the Standalone Financial Statements
Corporate insolvency Proceedings as per insolvency and Bankruptcy Code, 2016 (IBC )
The Honble National Company Law Tribunal, Mumbai bench ("NCLT"), vide order dated 6th July, 2020 ("Insolvency Commencement Order) had initiated the Corporate Insolvency Resolution Process ("CIRP") against the Bothra Metals And Alloys Limited based on petition filed by the Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("the Code"). Mr. Harish Kant Kaushik has been appointed as the Interim Resolution Professional under Insolvency and Bankruptcy Code, 2016 by the Honble NCLT Mumbai Bench, vides its Order dated 6th July, 2020. Thereafter, pursuant to the Insolvency Commencement Order, the powers of the Board of Directors are stand suspended during the year under review and the same are exercised by Interim Resolution Professional.
2. Qualified Opinion
We have audited the standalone financial statements of Bothra Metals And Alloys Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2021, the Statement of Profit and Loss and Statement of Cash Flows for the year ended as on 31st March, 2021 and notes to the financial statements including summary of significant accounting policies and other explanatory information (hereinafter referred to as "the financial statements").
In our opinion and to the best of our information and according to the explanations given to us, except for effects of matters described in para 3(a), 3(b), 3(c), 3(d), 3(e), 3(f) and 3(g) in the basis for qualifying opinion, the aforesaid financial statements give the information required by the Companies Act, 2013 (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, 2021, its Profit (or loss) and cash flows for the year ended on that date.
3. Basis for Qualifying Opinion
We conducted our audit of the standalone financial statement 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 Auditors Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (1CAI) together with the ethical requirements that are relevant to our audit of the Standalone financial statements under the provisions of the Act and the Rules there under and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the standalone financial statements. We refer to the following notes to standalone financial statements; y
a. In view of the significant losses, which have been incurred by the company during the previous financial years, the carrying amount of fixed assets needs to be tested for impairment. The management has not done impairment testing and in absence of any information we are unable to comment as to whether any provision for impairment is required or not.
b. Note 13 to the standalone financial statements, the inventory valuing Rs. 13.02 lacs comprises of raw material and finished goods. The quantity and valuation of the inventory has been accepted as provided by the management / Interim Resolution Professional on the basis of management representation. Any deviation in the same may affect the financial position and / or financial performance of the company, to the extent.
c. Note 14 to the Standalone Financial Statements, the trade receivables amounting to Rs. 70.9 Crore which comprise the carried forward amount from the earlier year. Considering the age of receivable and non working of the company creates an uncertainty on the realization on these debtors and in addition to that there is no balance confirmation of these debtors so this effects the true and fair view of the Financial Statements.
d. Notel2 to the Standalone Financial Statements, represents GST Receivable of Rs.1.98 crore out of which Rs. 1.91 crore belongs Bombay GST registration, which is cancelled, appeal is pending. Accordingly, the loss is understated and assets are overstated to that extent.
e. Note 16 to the Standalone Financial Statements, in connection with the existence of material uncertainties over the reliability of the advances to supplier and advanvce for expenses amounting to Rs. 22.6 lacs included in financial Statement which are subject to confirmation and reconciliation. The Management is yet to assess the risk of default and resultant expected credit loss allowance on such asset.
f. Note 5 to 7 to the standalone financial statements, in respect of various claims, submitted by the financial creditors (including claims fund based and non-fund based exposure and claims on behalf of subsidiary companies and other parties), operational creditors, workmen or employees of the company to the Interim Resolution Professional pursuant to the insolvency and bankruptcy board of India (Insolvency resolution process for corporate persons ) Regulation, 2016 that are currently under consideration / reconciliation. Pending reconciliation / admission of such of claims by the IRP, we are unable to comment on consequential impact, if any, on the accompanying statements.
g. Note 5 to the Standalone Financial Statements, in respect of loans taken were understated by the interest and penalty amounting to RS.38.22 crore, which has a material effect on the financial statement.
h. The accompanying statements are not in compliance with the Indian accounting standards (‘Ind AS) specified under section 133 of the Companies Act, 2013, read with relevant Rules issued there under.
4. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be communicated in our audit;
|S.NO KEY AUDIT MATTER||AUDITORS RESPONSE|
|1. Recoverability of Indirect tax receivables||PRINCIPAL AUDIT PROCEDURES|
|As at March 31, 2021 Non-current assets in respect of withholding tax and GST ITC which are subject to reconciliation.||We have performed due diligence to review the nature of the amounts recoverable, the sustainability and the likelihood of recoverability upon final resolution. The management is yet to assess the change in risk of default and resultant expected credit loss allowance on such assets.|
|Refer Note 12 to the standalone financial statements|
|2. Accuracy evaluation of property ,plant and equipment||PRINCIPAL AUDIT PROCEDURES|
|Refer Note 9 to the standalone financial statements||Our audit approach was a combination of test of internal controls and substantive procedures which included the following:|
|i. We have evaluated the design of internal control relating to recording of efforts incurred and estimation of efforts required to complete the performance obligations.|
|ii. We have in respect of non availability of physical verification and market value of property, plant and equipment and in the absence of corroborative evidence, we unable to comment on the extent to which such balances recoverable.|
|iii. Valuation obtained by the IRP under T&BC is confidential and cannot be shared except as per the provisions of the I&BC 2016.|
|3. Accuracy evaluation of Trade Receivables||PRINCIPAL AUDIT PROCEDURES|
|Refer Note 14 to the standalone financial statements||We have evaluated the design of internal control relating to recording of efforts incurred and estimation of efforts required to complete the performance obligations. In respect of non availability of reconciliation and confirmation of balances from the trade receivables and in the absence of corroborative evidence, we are unable to comment on the extent to which such balances are recoverable.|
5. Information Other than the Financial Statements and Audit Report Thereon
In the ongoing Corporate Insolvency Resolution Process (CIRP), The Interim Resolution Professional (IRP) is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexure to Boards Report and Shareholders Information, but does not include the standalone financial statements and our auditors report thereon. These reports are expected to be made available to us after the date of this auditors report.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance and conclusion thereon.
6. Responsibilities of management and those charged with governance for the Standalone financial statements
In the view of ongoing Corporate Insolvency Resolution Process (CIRP), The Interim Resolution Professional (IRP) is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these Standalone financial statements that give a true and fair view of the financial position, financial performance, changes in equity 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.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities, selection and application of appropriate implementation and maintenance of 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 financial statements management is responsible for assessing the Companys 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 respective Board of Directors/ Management under the direction of the Interim Resolution Professional is resDonsible for overseeing the ComDanvs financial reDortine process.
7. Auditors responsibilities for the audit of the 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 auditors 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 may involve collusion forgery intentional omissions misrepresentations or the override of internal control.
•Obtain an understanding of internal control 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 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 Companys ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditors 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 auditors 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 Standalone 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 fin to evaluate the effect of any identified misstatements iru-the^
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 financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors 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.
8. Emphasis of Matters
Attention is invited to
a. As per the Insolvency and Bankruptcy Code, 2016 ("insolvency code"), the IRP receives, collect and admit claims submitted by the Creditor (operational, financial and other), employee and workmen of the company, and Govt. Authorities. Such claims can be submitted to IRP during C1RP, till the approval of the Resolution Plan by COC. The impact of such admitted and rejected claims, if any, has not been considered in the preparation of the Financial Statements.
b. Information is not available regarding classification of Creditors into Micro, Small and Medium Enterprises as required under the Micro, small and Medium Development Act, 2006, The Financial impact of this non-compliance, if any could not be determined.
9. Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("the Order")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 to the extent applicable that:
a. We have sought and except for the effects / possible effects of the matters described under "Basis for Qualified Opinion" paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
b. Except for the effects / possible effects of matters described in the "Basis for Qualified Opinion" paragraph, 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 Other Comprehensive Income and the statement of 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 do not comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended.
e. The Company has not appointed qualified Company Secretary as Compliance officer during the year under review in violation of Regulation 6 of SEBI (LODR) Regulations 2015 and Section 203 of the Companies Act, 2013.
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"; and
g. With respect to the other matters to be included in the Auditors 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. On the basis of the written representations received and taken on record by the Interim Resolution Professional, the Company has not disclosed the impact of pending litigations on its financial position in its standalone financial statements.
ii. The Company did not have any long-term contracts including derivatives 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 A" TO THE INDEPENDENT AUDITORS REPORT
The Annexure referred to in paragraph 1 under "Report on Other Legal and Regulatory Requirement" section of our Independent Auditors Report to the members of the Company on the Standalone financial statements for the year ended 3 T! March, 2021 we report that:
1. In respect of Companys Fixed Asset
a. As explained to us, the Plant & Machinery have been physical verified by the management at reasonable intervals during the year with the help of outside agency.The discrepancies reported on such verification were not properly dealt with in the books of account.
2. As confirmed by the management, physical verification of the inventory has been conducted at reasonable intervals by the management. No material discrepancies were noticed.
3. According to the information and explanation given to us the Company has not granted unsecured loans to bodies corporate covered in the register maintained under Section 189 of Companies Act 2013
4. According to the information and explanations given to us, the Company has not accepted any deposits from the public as per the directives issued by the Reserve Bank of India and as per the provisions of section 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under.
5. The maintenance of cost records has been prescribed by the Central Government under sub-section (1) of section 148 of the Companies Act 2013 for the business activities carried out by the company. According to the information and explanation given to us, the provisions of the paragraph 3(vi) of the Order are not applicable to the Company as the Company is not covered by the Companies (Cost Records and Audit) Rules, 2014.
6. According to the information and explanations given to us, the company has defaulted in repayment of loans to the banks, and to promoters. These dues are subject matter of insolvency proceedings; the Company is undergoing CIRP under IBC, 2016. Pursuant to the approval of the order by the Honble NCLT.
7. The Company has not raised money by way of initial public offer or further public offer (including debt instruments) and term loan during the year. Accordingly clause (ix) of the paragraph 3 of the Order is not applicable.
8. 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 duringthe course of our audit.
9. In our opinion and according to the information and explanation given to us the company has paid/ provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V of the Act.
10. As the Company is not a Nidhi Company accordingly clause (xii) of paragraph 3 of the order is not applicable to the Company.
11. According to the information and explanation given to us, we are unable to obtain sufficient and appropriate audit evidence to comment whether all transactions with in the related parties as disclosed in Note 25 to the financial statements are in compliance with section 177 & 188 of the Companies Act 2013. Further were applicable details have been disclosed in the financial statements as required by the applicable accounting standard.
12. According to the information and explanation given to us the company has not made any preferential allotment or private placement of shares or fully or partly convertible debenture during the year and hence reporting under clause 3(xiv) of the order is not applicable to the company.
13. In our opinion and according to the information and explanations given to us, we are unable to obtain sufficient and appropriate audit evidence to comment whether during the year the company has entered into any non-cash transactions with its directors or persons connected to its directors.
14. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
For and on behalf of
Rajeev Sood& Co.
Chaltered Accountants FRN:- 0I0478N
Partner Membership No. 552767
Dated :- 30th June 2021
TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF BOTHRA METALS AND ALLOYS LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Sectionl43 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of BOTHRA METALS AND ALLOYS LIMITED ("the Company") Limited as of 31sl March, 2021 in conjunction with our audit of the Standalone financial statements of the Company for the year ended on that date.
In our opinion and according to the information and explanation given to us and based on our audit following material weaknesses have been identified as at March 31, 2021:
The company did not have appropriate internal financial controls related to:-
a) Assessment of trade receivable and withheld amounts which are subject matters of various disputes/arbitration proceedings/negotiations with the customers and other disputes.
b) Physical verification of fixed assets and inventories. Further the company did not have any internal audit system during the year.
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 Companies Act 2013.
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 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 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 Standalone 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 Companys internal financial controls system over financial reporting.
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.
Gold/NCD/NBFC/Insurance and NPS
Gold/NCD/NBFC/Insurance and NPS