aftek ltd Auditors report


To the Members of

AFTEK Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of AFTEK Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss, and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Managements Responsibility for the Standalone Financial Statements

The Companys 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 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 Companies Act, 2013, 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 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 control, 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.

Auditors Responsibility

Ourresponsibility is to express an opinion on these standalone financial statements based on ouraudit.

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 provision of the Act and the Rules made thereunder.

Weconducted ouraudit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that wecomply 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 auditors judgment, 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 financial control relevant to theCompanys preparation of the financial statements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances.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.

Webelieve that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for ouraudit opinion on financial statements.

Basis for qualified opinion

1. Note no.39 regarding, Management has not considered any provision in respect of outstanding Debtors for a period more than 12 months amounting to 30,704.17 Lacs which in our opinion, as evidenced by the poor recovery made during the year, are doubtful of recovery. Consequently, profit before tax is overstated by 30,704.17 Lacs; Further in our view there is significant uncertainty as to ultimate collection of Debtors due to non-receipt from overseas debtors. Therefore we are further unable to comment on recoverability of balance debtors amounting to 926.34 Lacs;

2. Note no.40 regarding, company has given certain capital advances and made some investments totalling to 6975.20 Lacs towards the building under construction at Hinjewadi, Pune, upto the year ended, 31-3-2010, thereafter there are no further developments/construction made. The said Plot of land is mortgaged to Bank of India -Jersey Channel Islands against the term loan. However since the Company has made default in repayment of Principal and Interest thereon, Bank has demanded repayment total loan and taken the possession of the land alongwith the construction in progress. The bank has called for bids at a base price of 1800.00 Lacs. There is no provision made towards the eventual loss on such auction, which is presently not ascertainable till such disposal.

3. Note no.42 regarding, Company had purchased Intangible Assets under development for various ongoing projects. Due to the delay in the projects, Intangible Assets under development for 10,325.97 Lacs are yet to be put to use as on the date of balance sheet. The company is of the opinions that with the improved market conditions all the Assets under development will be profitably used by the company in the future projects which in our opinion, as evidenced by the delay in the use of the same, are doubtful of commercial usage. Consequently, profit before tax is overstated by

10,325.97 Lacs.

Qualified Opinion

In ouropinion and to the best of our information and according to the explanations given to us,except for the effects of the matters described in the Basis for qualified opinion paragraph 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:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2017; (b) in the case of the Statement of Profit and Loss, of the loss for theyear ended on that date;and (c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of matter

1. Note no.34 b (ii) regarding Liability if any of the pending assessment under Income tax, Sales tax, unpaid PF dues (including interest, if any) which are presently not ascertainable.

Report on Other Legal and Regulatory Requirements.

1. As required by the Companies ( Auditors Report ) Order, 2016 ("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 the paragraph 3 and 4 of the Order, to the extent applicable.

2. As required by section 143(3) of the Act, wereport 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 purpose of ouraudit;

b. 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;

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 account;

d. Except for the effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, and with regard to the non-availability of the Actuarial valuation of the Gratuity Liability, 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;

e. On the basis of written representations received from the Directors as on March 31, 2017, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017, from being appointed as a director in terms of Section 164 (2) of theAct.

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"; and

g. With respect to the other matters to be included in the Auditors 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 explanation given to us:

i. The company has disclosed the impact of pending litigations on its financial position in its standalone financial statements-refer Note 34 (b)(ii) of financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at March 31, 2017.

iii. There has been significant delay in transferring amounts of 20.24 Lacs, which were required to be transferred to the Investor Education and Protection Fund by the Company.

iv. The Company had provided requisite disclosure in its financial statement (Refer Note 36) as to holding as well as dealing in Specified Banks Notes during the period from 8th November, 2016 to 30th December, 2016 and is in agreement with the relevant books of accounts maintained by the company.

For GMJ & Co.
Chartered Accountants
Firm Registration Number: 103429W
Haridas Bhat
Partner
Membership Number: 039070
Mumbai
May 30, 2017

Annexure A to the Independent Auditors Report

(Referred to in Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date)

i. a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b. According to the information and explanations given to us, the Fixed Assets have been physically verified by the management during the year,no material discrepancies were noticed on such verification with book records. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and nature of its assets.

c. According to the information and explanations given to us and the records examined by us, the company does not owned immovable properties. In respect of immovable properties taken on lease and disclose as fixed asset as leasehold land and building in the financial statements, the lease agreements are in the name of company.

ii. The management has conducted physical verification of inventory at reasonable intervals during the year. In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory.

No material discrepancies have been noticed on physical verification between physical stock and book records.

iii. In respect of loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered under register maintained under section 189 of the Companies Act, 2013;

a. In our opinion, the terms and conditions on which the loans have been granted are not, prima facie, prejudicial to the interest of the company;

b. The terms of arrangements do not stipulate any repayment schedule and the loans are repayable on demand.

Accordingly, this paragraph is not applicable to the Company in respect of repayment of the principal amount.

c. There are no overdue amountsin respect of loans granted to the parties covered under register maintained under section 189 of the Companies Act, 2013.

iv. In our opinion and according to the information and explanations given to us and based on our examination of the records, the Company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 in respect of loans, investments, guarantees, and security given, if any.

v. The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 of the Act and other relevant provisions with regard to the deposits accepted from the public are not applicable.

vi. Pursuant to Section 148 of the Companies Act, 2013, the Central Government made The Companies (Cost Records and Audit) Rules, 2014, not applicable to the company because the threshold applicable limit mentioned in rule 3 is not fulfilled during the previous year.

vii. a. According to the information and explanations given to us the company is not regular in depositing undisputed statutory dues, Employees State Insurance, Sales-tax, Wealth Tax, Service Tax Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. Undisputed provident fund dues are not regularly deposited with the appropriate authorities. In respect of income tax, the Company is not regular in depositing those dues with the appropriate authorities and there have been significant delays in a large number of cases. Undisputed amounts payable in respect of above mentioned taxes which were outstanding, at the year-end for a period of more than six months from the date they became payable are as follows

Name Of

Nature of Dues

Amount

Period to which Amount relates

Date of

The Statute ( in Lacs)

Payment

Income tax Act,1961

Deduction of Tax At Source

180.20

April, 2010 to September,2016

Not Paid

Employees Provident Fund

Provident Fund Contribution

86.81

April, 2010 to september,2016

Not Paid

and Miscellaneous
Provisions Act, 1952
Maharashtra State Tax on

Profession Tax

6.54

September, 2010 to september,2016

Not Paid

Professions, Trades,
Callings and Employments
Act, 1952
Maharashtra Value Added

Sales Tax

3.27

March,2011 to september,2016

Not Paid

Tax Act, 2002
Central Sales Tax Act, 1956

Central Sales Tax

27.65

September,2010 to september,2016

Not Paid

b. According to the information and explanations given to us, following dues have not been deposited with the concerned authorities on account of dispute as at 31st March, 2017: :

Name of

Nature of the Dues

Amount

Period to which Amount relates

Date of

the Statute ( in Lacs)

Payment

Income Tax Act, 1961

Tax on Regular

30.52

2008-09

Not Paid

Assessments U/s143(3)

8.78 2009-10 Not Paid
128.00 2010-11 Not Paid
1263.06 2011-12 Not Paid

Forum where dispute is pending for the year 2011-2012 : Commissioner of Income-tax (appeal).

viii. In According to the information and explanations given to us, the company has defaulted in repayment of dues to banks

Sr.No

Name of the Bank

Type of Loan

Period to which

Defaulted

Defaulted

Amount relates

Principal

Interest

( in Lacs )

( in Lacs )

I Bank of India - Term Loan April, 2011 to March, 2017 3116.14 552.65
Jersey Channel Islands
II State Bank of Term Loan April, 2011 to March, 2017 4000.00 3209.00
Bikaner & Jaipur
III State Bank of Cash Credit A/c April, 2011 to March, 2017 1479.28 864.41
Bikaner & Jaipur

The Company does not have any loans or borrowings from financial institutions or government and has not issued any debentures.

ix. In our opinion and according to the information and explanations given to us, the monies raised by way of term loans were applied for the purposes for which they were raised. The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year.

x. According to the information and explanations given to us, no material fraud by the company or on the Company by its officer or employees has been noticed or reported during the course of our audit.

xi. According to the information and explanation give to us and based on our examination of the records, the Company has not paid/provided for managerial remuneration. Therefore, paragraph 3 (xi) of the Order is not applicable.

xii. In our opinion and according to the information given to us, the Company is not a Nidhi Company. Therefore, paragraph 3(xii) of the Order is not applicable.

xiii. According to the information and explanation give to us and based on our examination of the records of the Company, the transactions with related parties are in compliance of section 177 and 188 of the Companies Act, 2013 wherever applicable and the details have been disclosed in the Financial Statements, as required by the applicable accounting standards.

xiv. Based upon the audit procedures performed and the information and explanations given by the management, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the company.

xv. The company has not entered into any non-cash transactions with the directors or persons connected with him. Therefore, paragraph 3(xv) of the Order is not applicable.

xvi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For GMJ & Co.
Chartered Accountants
Firm Registration Number: 103429W
Haridas Bhat
Partner
Membership Number: 039070
Mumbai
May 30, 2017

Annexure – B to the Auditors Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of AFTEK Limited ("the Company") as of March 31, 2017 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness.Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgments, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For GMJ& Co.
Chartered Accountants
Firm Registration Number: 103429W
Haridas Bhat
Mumbai Partner
May 30, 2017 Membership Number: 039070