We have audited the accompanying standalone financial
statements of Balu Forge Industries Limited(the "Company"),
which comprise the Balance Sheet as at 31st March 2025, the
Statement of Profit and Loss (including Other Comprehensive
Income), the Statement of Changes in Equity and the
Statement of Cash Flows for the year ended and notes to
the standalone Financial Statements including a summary
of significant accounting policies and other explanatory
information (hereinafter referred to as the "standalone
financial statements").
In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid standalone
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 Indian
Accounting Standards prescribed under section 133 of the
Act read with the Companies (Indian Accounting Standards)
Rules,2015, as amended, ("IndAS")and other accounting
principles generally accepted in India, of the state of affairs
of the Company as at 31st March 2025, and its profit and total
comprehensive income, changes in equity and its cash flows
for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements
in accordance with the Standards on Auditing ("SA"s) specified
under section 143(10) of the Act. Our responsibilities under
those Standards are further described in the Auditor's
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 ("ICAI") 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 made thereunder, and we have fulfilled our other
ethical responsibilities in accordance with these requirements
and the ICAI's Code of Ethics. We believe that the audit evidence
obtained by us is sufficient and appropriate to provide a basis
for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters 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. We have
determined the matters described below to be the key audit
matters to be communicated in our report.
We have fulfilled the responsibilities described in the Auditor's
responsibilities for the audit of the standalone financial
statements section of our report, including in relation to these
matters. Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the
risks of material misstatement of the standalone financial
statements. The results of our audit procedures, including the
procedures performed to address the matters below, provide
the basis for our audit opinion on the accompanying standalone
financial statements.
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Sr.
Key Audit Matter
No.
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Auditor's Response
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1 Capital Work-in-Progress (CWIP) and related Capital
Expenditure funded through Preferential Capital (as
described in Note 5.3 of the standalone Ind AS financial
statements)
The Company has made substantial investments in Plant &
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How our audit addressed the Key Audit Matter
Our audit procedures included:
• Evaluating whether the expenditure tested met the
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recognition criteria under Ind AS 16 and was appropriately
classified as CWIP.
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Machinery with a significant portion lying under Capital Work-
in-Progress (CWIP) as on the reporting date. The balance
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• Comparing actual project expenditure against budgets
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of CWIP is material to the financial statements. During the
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and plans to assess progress and identify any delays
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current and previous financial year, the Company has raised
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or cost overruns.
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funds through preferential capital issues, of which, certain
portions were earmarked for meeting its capital expenditure
requirements.
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• Reviewing management's impairment assessment
for CWIP and considering whether any impairment
indicators existed.
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Sr.
No.
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Key Audit Matter
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Auditor's Response
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Assessing whether the proceeds of preferential capital have
been appropriately utilized for capital expenditure, ensuring
that costs have been accurately capitalized in line with Ind AS
16 Property, Plant and Equipment, and the capitalization of
costs, allocation of overheads, determination of useful lives,
and assessment of impairment indicators involve significant
management judgment. Given the magnitude of investment
and management's estimation involved, this area carries a
risk of material misstatement
There is also a risk that expenditure may be misclassified
between CWIP and expenses or Property, Plant and
Equipment (PPE), or that the utilization of preferential capital
proceeds is not in line with intended purposes. Accordingly,
this has been considered a key audit matter.
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• Performing analytical procedures on movements in CWIP
during the year, including reconciliation with preferential
capital proceeds.
• Assessing the adequacy of related disclosures in the
standalone/consolidated financial statements in respect
of CWIP and preferential capital.
Based on the above procedures, we found that the Company's
accounting for CWIP and utilization of preferential capital
proceeds were reasonable and disclosures were appropriate.
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2
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Trade Receivables and Recoverability
(as described in Note 15 of the standalone Ind AS financial
statements)
The Company has significant trade receivables outstanding
at the year-end. The assessment of recoverability,
determination of expected credit losses (ECL), and adequacy
of provisions involve significant judgment by management,
particularly in relation to customers facing financial stress or
where collection has been long outstanding. Considering the
materiality and judgment involved, this area was considered
a key audit matter.
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How the Matter was Addressed in Audit
Our audit procedures included, among others:
• Evaluating the Company's policy for impairment of
receivables and its compliance with Ind AS 109.
• Assessing the ageing profile of debtors and testing
subsequent collections on a sample basis.
• Discussing with management the status of key overdue
accounts and evaluating correspondence with customers.
• Reviewing historical recovery trends and considering
current economic conditions in assessing
provision adequacy.
• Testing management's ECL model, including key
assumptions such as probability of default and
loss given default.
• Assessing the adequacy of related disclosures in the
financial statements.
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3
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Revenue recognition
(as described in Note 5(e) of the standalone Ind AS financial
statements)
Revenue from sales is recognized when control of the
products has transferred, being when the products are
delivered to the customer, the customer has full discretion
over the channel and price to sell / consume the products,
and there is no unfulfilled obligation that could affect the
customer's acceptance of the products. Delivery occurs when
the products have been shipped to the specific location, the
risks of obsolescence and loss have been transferred to the
customer, and either the customer has accepted the products
in accordance with the sales contract or the acceptance
provisions have lapsed.
During the year ended 31st March 2024, the Company has
recognised revenue amounting to Rs 42,761.46 lakhs from
export sale of goods and Rs 15,366.22 lakhs from domestic
sale of goods & services (incl. merchant export).
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In the view of the significance of the matter we addressed the
key audit matter by applying the following audit procedures.
Principal Audit Procedures
• 1Considered Company's revenue recognition policy and
its compliance in terms of Ind AS 115 ‘Revenue from
contracts with customers'.
• Assessed the design and tested the operating
effectiveness of internal controls related to
revenue recognition.
• Tested samples of individual sales transaction and
traced to sales invoices, sales orders, (received from
customers) and other related documents.
Further, in respect of the samples tested, checked recognition
of revenue in accordance with the terms / when the conditions
for revenue recognitions are satisfied.
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Sr.
Key Audit Matter
No.
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Auditor’s Response
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Terms of sales arrangements, including the timing of transfer
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How our audit addressed the key audit matter
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of control, delivery specifications including in co-terms
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Selected sample of sales transactions made pre-
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and
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in case of exports, timing of recognition of sales require
significant judgment in determining revenues. The risk is,
therefore, that revenue may not get recognised in the correct
period. Accordingly, due to the significant risk associated
with revenue recognition in accordance with terms of Ind
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post-year end, agreed the period of revenue recognition to
underlying documents.
1) Performed procedures to identify any unusual trends of
revenue recognition.
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AS 115 ‘Revenue from contracts with customers', it has
been determined to be a key audit matter in our audit of the
standalone Ind AS financial statements.
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2) Assessed the relevant disclosures made within
standalone Ind AS financial statements.
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the
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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 other
information. The other information comprises the information
included in the Management Discussion and Analysis, Board's
Report including Annexures to Board's Report, Business Report,
Chairman's report on Corporate Governance and Shareholder's
Information, but does not include the standalone financial
statements and our auditor's report thereon.
Our opinion on the standalone 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 standalone financial
statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the
other information is materially inconsistent with the
standalone 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 Responsibilities for the Standalone
Financial Statements
The Company's Board of Directors 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, including other comprehensive income, changes
in equity and cash flows of the Company in accordance with the
Ind AS and other accounting principles generally accepted in
India. 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 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 standalone 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 standalone financial reporting process.
Auditor’s 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 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 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 standalone financial
control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
Under section143(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 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 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 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 standalone 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 standalone
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 standalone 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"), issued by the Central Government
of India in terms of sub-section (11) of section 143 of
the Companies Act, 2013, we 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, 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 it
appears from our examination of those books.
(c) The standalone Balance Sheet, the standalone
Statement of Profit and Loss including Other
Comprehensive Income, the standalone Statement
of Changes in Equity and the standalone 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 comply with the IndAS specified under
Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received
from the directors as on 31st March 2025 taken
on record by the Board of Directors, none of the
directors is disqualified as on 31st March 2025 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". 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 in 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 read
with Schedule V of the Act.
(h) With respect to the other matters to be included
in the Auditor's Report in accordance with Rule
11 of the Companies (Audit and Auditors) Rules,
2014 as amended, in our opinion and to the
best of our information and according to the
explanations given to us:
i. The Company has disclosed the impact of
pending litigations on its financial position in its
standalone financial statements;
ii. The Company has made provision, as required
under the applicable law or accounting
standards, for material foreseeable losses,
if any, on long-term contracts including
derivative contracts.
iii. There were no amounts which were required
to be transferred to the Investor Education and
Protection Fund by the Company during the
year ended 31st March 2025.
iv. The Management has represented that to the
best of its knowledge and belief as disclosed
in the notes to the accounts 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(s) or entity(ies) including foreign entities
("Intermediaries") with the understanding
whether recorded in writing or otherwise that
the Intermediary shall 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.
v. The Management has represented that to the
best of its knowledge and belief as disclosed
in the notes to accounts no funds (which are
material either individually or in the aggregate)
have been received by the Company from any
person(s) or entity(ies)including foreign entities
("Funding Parties") with the understanding
whether recorded in writing or otherwise that
the Company shall 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.
vi. Based on the audit procedures that has 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 11(e) as provide under (a) &(b) above
contain any material mis-statement.
vii. The Company has not declared dividend or paid
dividend during the year and has not proposed
final dividend for the year.
viii. Based on our examination which included test
checks, the Company has used an accounting
software for maintaining its books of account
which has a feature of recording audit trail
(edit log) facility and the same has operated
throughout the year for all relevant transactions
recorded in the software. Further, during the
course of our audit we did not come across any
instance of audit trail feature being tampered
with. Additionally, the audit trail has been
preserved by the Company as per statutory
requirements for record retention.
For M. B. Agrawal & Co.
Chartered Accountants
(Firm's Registration No.100137W)
Leena Agrawal
Partner
(Membership No.061362)
Place: Mumbai
Date: 14th May, 2025
UDIN: 25061362BMLWWU9172
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