1. We have audited the attached Balance Sheet of BGR ENERGY SYSTEMS
LIMITED as at March 31, 2011 and the related Profit and Loss account and
Cash Flow Statement for the year ended on that date annexed thereto.
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and signifcant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 (the
‘Order’), as amended, issued by the Central Government of India in
terms of sub-section (4A) of Section 227 of the Companies Act, 1956
(the ‘Act’), we enclose in the Annexure a Statement on the matters
specifed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the report referred to in paragraph 3
above, 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 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, Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
d) In our opinion, the Balance Sheet, Profit and Loss Account and the
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section (3C) of Section 211 of
the Act;
e) On the basis of the written representations received from the
directors, as on March 31, 2011, and taken on record by the Board of
Directors, we report that none of the directors are disqualified as on
March 31, 2011 from being appointed as a director in terms of clause
(g) of sub-section (1) of Section 274 of the Act;
f) In our opinion, there were no dues on account of cess under Section
441A of the Act, since the aforesaid section has not yet been made
effective by the Central Government of India as on March 31, 2011; and
g) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts 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:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2011;
(ii) in the case of the Profit and Loss account, of the Profit for the
year ended on that date; and
(iii) in the case of the cash fow statement, of the cash fows for the
year ended on that date.
ANNEXURE TO THE AUDITORS’ REPORT
Annexure referred to in paragraph 3 of the Auditors’ Report to the
Members of BGR ENERGY SYSTEMS LIMITED for the year ended March 31,
2011. We report that:
(i) (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation of fxed
assets;
(b) The Company has conducted physical verifcation of fxed assets at
reasonable intervals and no material discrepancies were noticed on such
verifcation; and
(c) In our opinion, the fxed assets disposed off during the year were
not substantial and therefore, do not affect the going concern
assumption.
(ii) (a) The management has conducted physical verifcation of inventory
at reasonable intervals during the year;
(b) In our opinion, the procedures of physical verifcation of inventory
followed by the management are reasonable and adequate in relation to
the size of the company and the nature of its business; and
(c) The Company is maintaining proper records of inventory. There are
no major material discrepancies noticed on physical verifcation between
book stock and physical stock.
(iii) (a) The Company has granted interest free unsecured loans to 6
parties covered in the register maintained under Section 301 of the
Act. The maximum amount involved during the year and the
year-end-balance of these loans amounts to Rs. 1,432.45 lakhs and Rs.
1,418.33 lakhs respectively;
(b) In our opinion and as per the information and explanations given to
us, the terms and conditions of the said loans are not prima facie
prejudicial to the interest of the company;
(c) In our opinion and on verifcation of the books of account, in
respect of the above mentioned loans, there has been no regular
repayment of the principal amount during the year;
(d) In our opinion, in respect of the above mentioned loans, reasonable
steps have been taken by the company for recovery of the principal
amount due. The outstanding principal amount as on March 31, 2011 is Rs.
1,418.33 lakhs;
(e) According to the information and explanations given to us, the
Company has not availed any loans, secured or unsecured, from
companies, frms or other parties covered in the register maintained
under Section 301 of the Companies Act, 1956. In view of the foregoing,
the question of reporting on Clauses 4(iii)(f) and 4(iii)(g) of the
said Order does not arise.
(iv) In our opinion and according to the information and explanations
given to us, there exists an adequate internal control system
commensurate with the size of the Company and the nature of its
business, for the purchase of inventory, fxed assets and for the sale
of goods and services. Further, on the basis of our examination of the
books and records of the Company, and according to the information and
explanations given to us, we have neither come across nor have been
informed of any continuing failure to correct major weaknesses in
aforesaid internal control system.
(v) (a) As per the information and explanations furnished by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in Section 301 of the Act that need to be
entered into the register maintained u/s. 301 have been entered; and
(b) The transactions made in pursuance of such contracts or
arrangements have been made at prices which are reasonable having
regard to the prevailing market prices at the relevant time.
(vi) The Company has not accepted any deposits from the public within
the meaning of Sections 58A, 58AA or any of the relevant provisions of
the Act and rules framed thereunder.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size of the Company and nature of its business.
(viii) There is no order or notifcation by the Central Government
prescribing maintenance of cost records by the Company u/s. 209 (1)(d)
of the Companies Act, 1956.
(ix) (a) In our opinion and according to the information given to us
and on the basis of our examination of the records of the Company,
amounts deducted/accrued in the books of account in respect of
undisputed statutory dues including Provident Fund, Employees’ State
Insurance, Profession Tax, Income-tax, Sales-tax, VAT, Works Contract
Tax, Wealth Tax, Service tax, Customs Duty, Excise Duty, Cess and other
statutory dues have generally been regularly deposited during the year
by the company with the appropriate authorities. As explained to us,
the Company did not have any dues on account of Investor Education and
Protection Fund.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees’
State Insurance, Profession Tax, Income-tax, Sales-tax, VAT, Works
Contract Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess
were in arrears as at March 31, 2011 for a period of more than six
months from the date they became payable; and
(b) As per the information and explanations provided to us, the
following are the details of Disputed Tax Liabilities and the forum in
which they are pending:
Financial amount Type of Tax Forum in which the
year Rs. in Liability appeal is lying in
lakhs
1997-98 39.23 Sales Tax Honorable High Court,
Andhra Pradesh
1998-99 0.12 Sales Tax Commercial Tax Officer,
Andhra Pradesh
1999-00 0.11 Sales Tax Commercial Tax Officer,
Tamilnadu
2001-02 2.21 Sales Tax Sales Tax Appellate
Tribunal, Tamilnadu
2004-05 5.57 Sales Tax Sales Tax Appellate
Tribunal, Vishakapatnam,
Andhra Pradesh
2005-06 9.95 Sales Tax Appellate Deputy
Commissioner, Guntur,
Andhra Pradesh
2005-06 16.96 Central Sales Sales Tax Appellate
Tax Tribunal, Vishakapatnam,
Andhra Pradesh
2005-06 39.98 Sales Tax Deputy Commissioner
Appeals, Ernakulam,
Kerala
2006-07 2.59 Sales Tax Sales Tax Appellate
Tribunal, Vishakapatnam,
Andhra Pradesh
2006-07 2.69 Sales Tax Appellate Deputy
Commissioner, Guntur,
Andhra Pradesh
2007-08 7.43 Sales Tax Sales Tax Appellate
Tribunal, Vishakapatnam,
Andhra Pradesh
2007-08 41.75 Service Tax Commissioner Appeals,
Central Excise, Chennai,
Tamilnadu
2007-08 19.37 Sales Tax Appellate Deputy
Commissioner, Kota,
Rajasthan
2007-08 2.11 Sales Tax Appellate Deputy
Commissioner, Guntur,
Andhra Pradesh
2007-08 3779.69 Income Tax Commissioner Appeals,
Guntur, Andhra Pradesh
2008-09 13.17 Entry Tax Honorable High Court of
Rajasthan
(x) The Company does not have any accumulated losses at the end of the
financial year. The Company has not incurred cash losses during the
financial year covered by the audit and in the immediately preceding
financial year.
(xi) In our opinion and according to the information given to us, the
Company has not defaulted in repayment of dues to any financial
institution or banks.
(xii) In our opinion and according to the explanations given to us, the
Company has not granted any loans or advances on the basis of security
by way of pledge of shares, debentures or other securities.
(xiii) The Company is not a chit fund/nidhi/mutual beneft fund/
society. Therefore, the provisions of clause (xiii) of paragraph 4 of
the Order are not applicable to the Company.
(xiv) The Company is not dealing or trading in shares, securities,
debentures and other investments.
(xv) The Company has given guarantee for loans taken by others from
banks or financial institutions, the terms and conditions whereof, in
our opinion, are not prejudicial to the interest of the Company.
(xvi) During the year, the Company has availed term loans for acquiring
various fxed assets. As per the information and explanations provided
to us, we are of the opinion that these loans were applied for the
purpose for which the same were availed.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment by the Company.
(xviii) The Company has not made any preferential allotment of shares
to parties and companies covered in the Register maintained under
Section 301 of the Act.
(xix) The Company has not issued any debentures.
(xx) The Company has raised net proceeds of Rs. 19012 lakhs by way of
initial public offering (IPO) during the year ended March 31, 2008.
During the year, the Company has utilized the balance proceeds of Rs.
6512 lakhs towards augmenting working capital requirements being one of
the objects of issue. The Company has disclosed the end use of money
by way of notes to accounts in point 18 of Schedule 14 B.
(xxi) Based on the audit procedures performed and on the basis of
information and explanations given to us, we report that no fraud by
the Company has been noticed or reported during the year. However, an
instance of theft of Intellectual property, information and data has
been reported, as referred to in note 20 of notes to accounts in
Schedule 14B.
For MANOHAR CHOWDHRY & ASSOCIATES
Chartered Accountants
FR No: 001997S
G R HaRI
Place : Chennai Partner
Date : May 26, 2011 M.No. 206386
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