Birla Precision Technologies Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying Standalone financial statements of Birla Precision Technologies Limited (“the Company”) which comprise the Balance Sheet as at 31st March 2023, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and notes to the financial statements including a summary of significant accounting policies and other explanatory information.
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,
a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31 st March, 2023
b) In the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
c) In the case of the Cash Flow Statement, cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013 (“Act”). Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of Financial Results 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 (“ICAI”) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence obtained by us in is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters (‘KAM’) are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Branch Office : 701, Lakshchandi Heights, Gokuldham, Goregaon (E), Mumbai - 400 060
Description of Key Audit Matters
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The Key Audit Matters
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How our audit addressed the matter
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Capitalisation of property, plant and equipment
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Principal Audit Procedures
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During the year ended 31st March, 2023, the Company has incurred significant capital expenditure. Further the total additions to property, plant and equipment at various locations of the Company was ? 4134.73 Lakhs in the current year as set out in Note No.2.
Significant level of judgement is involved to ensure that the aforesaid capital expenditure/additions meet the recognition criteria of Ind AS 1 6 - Property, Plant and Equipment.
As a result, the aforesaid matter was determined to be a key audit matter.
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Our audit procedures included the following substantive procedures:
• We assessed the capitalisation process and tested the design and operating effectiveness of the controls in the process.
• Assessed the nature of the additions made to property, plant and equipment and capital work-in-progress on a test check basis to test that they meet the recognition criteria as set out in para 16 to 22 of Ind AS 16.
• Reviewed the project completion details provided by the management to determine whether the asset is in the location and condition necessary for it to be capable of operating in the manner intended by the management.
Based on the above procedures, management’s assessment in respect of Capitalisation of property, plant and equipment in the Standalone Financial Statements are considered to be adequate.
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Lockout of Foundry Division
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Principal Audit Procedures
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During the Year, the Company has Temporarily Locked Out its Foundry Division.
Matter -
The Company in its email dated 30th January, 2023 had informed the Board of Directors of its decision of Lockout of the Foundry Division of the Company situated atWaluj, Maharashtra, due to continuous losses borne by the Unit over a period of time and ongoing labor issues which were jeopardizing the overall business activity of the Foundry Business.The Company tried all the steps of salvaging the production and its business activities in spite of facing hurdles, but over a period, running business operations from the factory became unsustainable due to continuous losses and recurring issues at Factory.The Company wants to also convey to the board, that they have taken this step after considerable discussion with a view of maximizing shareholders wealth by focusing on profitable units and its subsequent business’s.The Company informed the Worker Unions of its decision of Lockout which was followed with informing the government bodies and authorities with Company engaging with all the stakeholders and safeguarding their interests.
Since, the Total Revenue from Operations of this division was 1 5.74% of total revenue from Operations as on March 3 1,2022, the aforesaid matter was determined to be a key audit matter.
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Our audit procedures included the following substantive procedures:
• We assessed the filings done and intimations done by the Management with the Stock Exchanges and the Appropriate Legal Authorities regarding the same.
• Based on the clarification received from the Management, the Demerger Application of the said department was already pending with the BSE.
• Based on our technical assessment, even though the revenue of the division was 15.74% of total revenue but the Division was loss making since many years (Loss of Rs 6.79 Crores against revenue of ? 38.76 Crores)
• Also, the Company is in expansion phase with its new project at Chalisgaon and expansion of existing facilities at Nashik.Therefore the lockout would not have any adverse impact on the Company.
On the basis of above Clarifications and assessment, we do not have any adverse comment on the Going Concern of the Company.
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Information other than the Financial Statements and Auditor’s Report Thereon
The Company’s Board of Directors is responsible for the preparation of the other information.The other information comprises the information included in the Management Discussion and Analysis, Board’s report including the Annexures to Board's Report Corporate Governance and Shareholder’s Information, but does not include the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Management’s Responsibility for the 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 the 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 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 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.
In preparing the financial statements, management is responsible for assessing the Company’s 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 Board of Directors are also responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibility
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error, and to issue an auditor’s 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 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 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 financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section I43(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 the management.
• Conclude on the appropriateness of management’s 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 Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the 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 auditor’s 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 financial statements, including the disclosures, and whetherthe financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the 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 (ii) to evaluate the effect of any identified misstatements in the financial statements.
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 auditor’s 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.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s Report) Order, 2020 (“the Order”), as issued by Central Government of India in terms of Sub Section (I I) of Section 143 of the Act, we hereby give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act, based on our audit 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 accounts 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 accounts;
d. In our opinion, the aforesaid financial statements comply with the Accounting Standards referred to in Section 133 of the Act read with Rule 7 of The Companies (Accounts) Rules, 2014;
e. On the basis of written representations received from the Directors and taken on record by the Board of Directors, none of the Directors is disqualified as on 3 Ist March 2023, from being appointed as a Director in terms of Section I 64(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". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting.
g. With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of section 197(16) of the Act, as amended:
I n our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
h. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule I I 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 does not have any pending litigations which would impact its financial position;
ii. The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses;
iii. There were no amounts required to be transferred to the Investor Education and Protection Fund by the Company.
iv. a. The Management has represented that, to
the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested ( either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
b. The Management has represented, that to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or
indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
c. Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule I I (e), as provided under (a) and (b) above, contain any material misstatement.
v. The Company has not declared or paid any dividend during the year.
For Valawat & Associates
Chartered Accountants FRN:003623C Jinendra Jain Partner
Membership No. 072995 UDIN: 23072995BGVUDX8748
Place: Mumbai Date: 26th May, 2023
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