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INDEPENDENT AUDITORS' REPORT
BF Utilities Limited,
Report on the Standalone Financial Statements
We Joshi Apte & Co. Chartered Accountants have audited the accompanying standalone financial statements of BF Utilities Limited ("the Company") which comprise the Balance Sheet as at 30 September, 2015, the Statement of Profit and Loss, the Cash Flow statement for the period then ended, and a summary of significant accounting policies and other explanatory information.
Management' Responsibility for the Standalone 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 preparation of these standalone 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 of 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 of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
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 thereunder.
We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards 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 auditor's judgement, 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 control relevant to the Company preparation of the financial statements that give a 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 the Company 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 audit opinion on 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, 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 30 September, 2015, and its profit and its cash flows for the period then ended on that date.
Emphasis of Matters
We draw attention to the following matters in the Notes to the financial statements:
(a) We draw attention to Note No.35 to the accompanying financial statements. As mentioned therein there are certain litigations by and against the Company and the subsidiaries of the Company that are yet to be decided by various courts and the matter is subjudice. No cognizance thereof is taken in the preparation of the financial statements, pending the final outcome of these cases.
Certain litigations by and against the Company and the subsidiaries of the Company are pending in various courts and the matter is subjudice. No cognizance thereof is taken in the preparation of the financial statements, pending final outcome of the cases.
(b) As stated in note no. 37 in the financial statements, in an event of non–receipt of Open Access Permission from Maharashtra State Electricity Distribution Co. Ltd., (MSEDCL) and consequent sale of power from April 2014 to March 2015 to MSEDCL, the profits of the Company for the accounting period ended on 31 March, 2015 would be lower by Rs. 40.5 Million (net of tax).
The Company is required to apply for Open Access Permission to Maharashtra State Electricity Distribution Co.
Ltd., (MSEDCL) every financial year. Upon receipt of the Open Access Permission, the credit notes are issued by MSEDCL for power generated at the Company's Wind Farm at Satara which are subsequently adjusted in the power bill of the customer in Pune.
The Company has applied for Open Access Permission to MSEDCL for the financial year1 April, 2014 to 31 March, 2015 well in time. However, due to certain policy issues at MSEDCL, it has still not granted Open Access Permission to the Company for the said year and consequently credit notes for this period are awaited from MSEDCL. The Company had preferred an appeal with MERC against the decision of MSEDCL.
Pending issuance of these credit notes, the Company has recognized revenue from power generation during 1 April, 2014 to 31 March, 2015 at the average power tariff rate at Rs. 5.75 per unit generated.
In case of unfavorable decision by MERC and consequent sale of power to MSEDCL ,at Rs. 2.52 per unit generated, as per case no. 58 of 2008 issued by MSEDCL, the profits of the Company for that year would be lower by about Rs.40.5 Million net of tax.
However the Company has received Open Access Permission for 3 years from 1 April, 2015
Our opinion is not qualified in respect of the above matters
Report on Other Legal and Regulatory Matters
1. As required by the Companies (Auditor's Report) Order, 2015 (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 statement on the matters specified in paragraph 3 and 4 of the Order .
2. Further, as required by section 143(3) of the Companies Act, 2013, we further report that:
(i) We have sought and obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit;
(ii) 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.
(iii) The Balance Sheet, the statement of Profit and Loss and the Cash Flow Statement dealt with by us in the Report are in agreement with the books of account.
(iv) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
(v) On the basis of the written representations received from the directors as on 30 September, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 30 September, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.
(vi) 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, in our opinion and to the best of our information and according to the explanations given to us:
a) The Company has, in accordance with generally accepted accounting practice, disclosed the impact of pending litigations on its financial position in its financial statements. Refer Note 26 & 27 to the financial statement;
b) The Company did not have any long–term contracts including derivative contracts for which there were any material foreseeable losses.
c) There were no amounts which were required to be transferred to the investor Education and Protection Fund by the Company.
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)
RE: BF Utilities Limited ("the Company")
1. In respect of the Company's fixed assets:
(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) As explained to us, the fixed assets were physically verified during the period by the Management in accordance with a regular program of verification which, in our opinion, provides for physical verification of the fixed assets at reasonable intervals having regards to the size of the Company and the nature of its assets. According to the information and explanation given to us, no material discrepancies were noticed on such verification.
2. Considering the nature of the Company, the provisions of clause 3 (ii) (a),(b) and (c) of the Order pertaining to the physical verification of inventory and maintenance of inventory records are not applicable to the Company.
3. The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 189 of the Act.
4. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations for purchase of fixed assets, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of fixed assets and the sale of goods and services. The activities of the Company do not involve activities of purchase of inventory. During the course of our audit, we have not observed any major weakness in such internal control system.
5. In our opinion and according to the information and explanations given to us, the Company has not accepted deposits. Therefore, the provisions of the clause 3 (v) of the Order are not applicable to the Company.
6. The provisions of clause (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.
7. According to the information and explanations given to us, in respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed statutory dues, including provident fund, income tax, sales tax, wealth tax, service tax, value added tax, cess and other material statutory dues applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of provident fund, income tax, sales tax, wealth tax, service tax, value added tax, cess and other material statutory dues in arrears as at 30September, 2015 for a period of more than six months from the date they became payable.
There were no dues of wealth tax, duty of customs, duty of excise and cess which have not been deposited as at 30 September, 2015 on account of disputes.
(c) There are no amountsthat are required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder.
8. The Company does not have accumulated losses. The Company has not incurred cash losses during the financial period covered by our audit and in the immediately preceding financial year.
9. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a bank. Further, in our opinion and according to information and explanations given to us, the Company did not have any amount outstanding to financial institutions, bank or debenture holders.
10. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantee given by the Company for loan taken by the subsidiary from a bank is not prima facie prejudicial to the interest of the Company.
11. In our opinion and according to the information and explanations given to us, the term loans were applied for the purpose for which the loans were obtained.
12. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the period.
For Joshi Apte & Co.
Chartered Accountants ICAI
Firm Registration Number: 104370W
P. J. Apte
Membership Number: 033212
28th November, 2015