BIGBLOC CONSTRUCTION LIMITED
Report on the Audit of the Standalone Financial Statements
OPINION
We have audited the accompanying Standalone Financial Statements of Bigbloc Construction Limited (“the Company”), which comprise the Balance Sheet as at 31st March, 2023, 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 on that date, and a summary of the 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 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 31st March, 2023 and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
BASIS OF OPINION
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs 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 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 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 we have obtained is sufficient and appropriate to provide a basis for our 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 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.
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Sr. No.
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Key Audit Matter
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Auditor’s Response
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1
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Recoverability/Refund of Indirect tax receivables
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Principal Audit Procedures
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As at 31st March, 2023, Current assets in respect of withholding tax and others includes
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We have involved our internal experts to review the nature of the amounts recoverable, the
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GST Credit and Disputed stamp duty payment and disputed service tax payment totaling to f 587.68 Lakhs.
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sustainability and the likelihood of recoverability upon final resolution.
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Refer Note 15 to the Standalone Financial Statements.
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2
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Transactions with related parties
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Principal Audit Procedures
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Starbigbloc Building Material Pvt. Ltd. (wholly owned subsidiary):
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Our audit procedures included, among others, the following:
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• Purchase of Goods of f 105.63 Lakhs;
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• We obtained an understanding of the process for identifying related party transactions,
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• Sale of Goods of f 448.31 Lakhs;
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performed a walkthrough and evaluated the design of controls related to the fraud risk identified;
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• Unsecured Loan outstanding of f 697.29 Lakhs;
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• We verified that the transactions are approved in accordance with internal procedures including
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• Interest Paid on loans taken of f 9.48 Lakhs;
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involvement of key personnel at the appropriate level;
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• Corporate Guarantee Given for loan taken by Subsidiary (Outstanding loan amount) f 2493.80 Lakhs.
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• We evaluated the business rationale of the transactions;
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Bigbloc Building Elements Pvt. Ltd. (wholly owned subsidiary):
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• We evaluated the rights and obligations per the terms and conditions of the agreements and assessed whether the transactions were recorded appropriately; and
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• Sale of Stores & Spares of f 18.01 Lakhs;
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• Sale of Goods of f 7.32 Lakhs;
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• We determined whether the directors have disclosed relationships and transactions in accordance with Ind AS - 24 (refer to disclosure note 47).
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• Loans given outstanding of f 936.11 Lakhs;
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• Interest Received on loans given of f 57.00 Lakhs;
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• Corporate Guarantee Given for loan taken by Subsidiary (Outstanding loan amount) f 3047.15 Lakhs.
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We considered the related party transactions to be significant to the audit as the risk is that if these transactions are not conducted at arm’s length, and/or the accounting treatment of the rights and obligations of these transactions are not correct, it could influence the results of the Company.
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Sr. No.
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Key Audit Matter
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Auditor’s Response
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3
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Valuation, Accuracy, Completeness and disclosures pertaining to Inventories
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Principal Audit Procedures:
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with reference to Ind AS 2
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We have performed the following alternate audit procedures to audit the existence and condition of
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Inventory comprises of raw material including packing material, work in progress,
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inventories as per the guidance provided in SA 501 “Audit Evidence - Specific Considerations for
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finished goods and stores and spares.
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Selected Items”, as at the year-end:
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We have identified the inventories as key audit matter because it is material to the Standalone Financial Statements.
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a)
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Performed test counts by tracing items from management’s counts records to the physical inventories and tracing the items selected from physical inventory to managements’ count records.
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b)
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Obtaining an understanding of the supply chain and testing selected key controls over recognition and measurement of inventory.
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c)
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We have evaluated the design of Internal Controls relating to recording and valuation of Inventory.
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d)
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Testing on a sample basis the accuracy of cost for inventory by verifying supporting documents and testing the net realizable value.
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e)
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Ensuring proper cut-off.
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f)
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Verified the stock movement analysis for the year in respect of key items of raw materials and finished goods at the factories to determine the quantities of inventory as at the balance sheet date.
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g)
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Performed procedures to audit the existence and condition of inventories, which includes inspection of supporting documentation relating to purchases, sales and production.
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OTHER INFORMATION
The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, 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 will 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 identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
MANAGEMENT’S AND BOARD OF DIRECTORS’ RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS
The Company’s management and 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, total 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 responsible for overseeing the Company’s financial reporting process.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud and 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 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 with reference to Standalone Financial Statements 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 in the Standalone Financial Statements made by the Management and Board of Directors.
• Conclude on the appropriateness of the Management and Board of Directors 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 financial statements, including the disclosures, and whether the 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 be 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 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.
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 Act, we give in the Annexure A, a statement on the matters specified in the paragraph 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 & 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 appears from our examination of such books.
c) The Balance Sheet, the Statement of Profit and Loss, the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this report are in agreement with the books of account.
d) In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31st March, 2023 and taken on record by the board of directors, none of the directors is disqualified as on 31st March, 2023 from being appointed as a directors 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”.
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/provided 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 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. the Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 35 to the financial statements;
ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. there were no amounts which were 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 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 persons or entities, including foreign entities (“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 have been received by the Company from any persons or entities, including foreign entities (“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; and
(c) Based on such audit procedures that the auditor has considered reasonable and appropriate in the circumstances, nothing has come to their notice that has caused them to believe that the representations under sub-clause (i) and (ii) contain any material mis-statement.
v. The final dividend proposed in the previous year, declared and paid by the Company during the year is in accordance with Section 123 of the Act, as applicable. The Company has not declared and paid any interim dividend during the year.
vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from 1st April, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended 31st March, 2023.
For RKM & CO.
Chartered Accountants Firm Registration No.: 108553W
Surat, 24th May, 2023 Manish R. Malpani
Partner
Membership No. 121031 UDIN: 23121031BGUKNZ1130
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