advanced micronic devices ltd Auditors report

To,

The Members of

Advanced Micronics Devices Ltd, Bangalore

REPORT ON THE IND AS FINANCIAL STATEMENTS

We have audited the accompanying Ind As financial statements of Advanced Micronics Devices Ltd ("the Company"), which comprise the Balance Sheet as at 31 March 2017, the Statement of Profit and Loss (including other comprehensive income), the statement of changes in equity, and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

MANAGEMENTS RESPONSIBILITY FOR THE IND AS FINANCIAL STATEMENTS

The Companys Board of Directors is responsible for the matters stated in sub-section 5 of Section 134 of the Companies Act, 2013 ("the Act") with respect to the preparation of these Ind As financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, the statement of changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards (INDAs) specified under Section 133 of the Act. 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 Ind As financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITORS RESPONSIBILITY

Our responsibility is to express an opinion on these Ind As financial statements based on our audit.

In conducting 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 there under.

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 the 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 the Companys preparation of the financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companys 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 qualified audit opinion.

Basis for Qualified Opinion

1. During the course of audit we have observed that company has stock Multi Para Patient Monitors and other equipments were nonmoving resulted in not being sold aggregating Rs 373.98 Lakhs. Out of which stock worth Rs 136.75 Lakhs lying in the customs bonded warehouse. These non-moving stocks have shelf life. Management has not assessed realizable value of above said nonmoving stocks.

2. Similarly we have also noticed bills receivable amounting to Rs 373.37 Lakhs relating to foreign branch operation were not realized for more than 360 days as on March 2017 . The Company has not obtained confirmation of balances of Trade Receivables as on 31st March 2017.

The management has not made assessment about recoverability of these receivables and has not made necessary provisions for bad and doubtful debts.

Had the same been accounted for the net loss for the year ended 31.03.2017 would have been higher by Rs.747.35 lakhs and negative Net worth of the company would have been higher by Rs.747.35 lakhs .

3. During the course of audit we have observed that bills payable amounting to Rs.1531.80 lakhs were outstanding for more than 360 days as on 31st March 2017. The company has not obtained confirmation of balances of these creditors as on 31st March 2017.ln the absence of such confirmation we are unable to certify the existence of these Trade Payables.

4. We also observed that Company has a branch at USA. This branch has not been audited by any other independent auditors for any financial year and also the company has not produced any records for verification to check the correctness of the entries.

These entries are certified by management, where in the branch share of assets are Rs. 408.87 Lakhs .Our report in so far it relates to the amount included in respect of The branch is based solely on financial statements certified by the branch management

In the absence of independent audit we are unable to comment on correctness of Unaudited results of the above mentioned branch.

5. According to the information and explanation given to us and on the basis of our Examination of books of account we observed , company has defaulted in payment of Rs.326.57 Lakhs towards full and final settlement of their employees as on 31.03.2017.

6. Further we also noticed that some of the ex employees filed petition for winding up in the Court for recovery of their outstanding dues which is admitted in the Labour Court and High court.

7. As per the information available from the income tax website, an amount of Rs. 6.47 Lakhs remains as unpaid demand which is not reconciled with the unaccounted payments made by the company

8. The company has stopped its Bengaluru business operation since July 2015

9. During the year under review the company has incurred a loss of Rs. 2896.03 Lakhs and after Provisioning/write off resulted in negative net worth of Rs. 4637.48 lakhs.

An Appropriate reference to BIFR/NCLT has to be made under the sick companies Rehabilitation Scheme which was not done by the management.

All the above conditions raise substantial doubt about the companys , ability to continue as a going concern Qualified Opinion

Subject to the above qualifications, in our opinion and to the best of our information and according to the explanation given to us:

i) The statement together with the notes thereon are presented in accordance with the requirements of the listing regulation in this regard and

ii) The annual audited results for the year ended March 31,2017 as set out in the statement gives a true and fair view of the net loss (including other comprehensive income/loss ) and other financial information for the year ended march 31.2017 in accordance with the accounting principles generally accepted in India.

Report on Other Legal and Regulatory Requirements

As required by ‘the Companies (Auditors Report) Order, 2016, issued by the Central Government of India in terms of subsection (11) of section 143 of the Act we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order.

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, except for the indeterminate effects of the matters described in the Basis for Qualified Opinion paragraph, 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 including other comprehensive income, the changes in equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, except for the indeterminate effects of the matters described in the Basis for Qualified Opinion paragraph, the aforesaid 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 the written representations received from the directors as on 31 March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2017 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 companys internal financial controls over financial reporting.

(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 explanations given to us:

i. The Company doesnt have any pending litigations which would impact financial position.

ii The Company is not required to make provision as at 31 March 2017, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts since the Company did not have any derivative contracts as at 31 March 2017.

iii. There were no amounts required to be transferred to the Investor Education and Protection Fund by the company.

iv. The company has provided requisite disclosures in the Ind AS financial statements as regards its holding and dealings in specified bank notes as defined in the notification S.O 3407(E) Dt: Nov 8/2016 of the ministry of finance, during the period from November 8, 2016 to December 30, 2016. Based on audit procedures performed and the representation provided to us by the management we report that the disclosures are in accordance with the books of accounts maintained by the company and as produced to us by the management.

For B. V. Swami & Co.,

Chartered Accountants

[A. AMARANATH]

Place: Bangalore Partner

Date: 30/05/2017 Membership Number: 213629

Firm Reg Number: 009151S

ANNEXURE A TO INDEPENDENT AUDITORS REPORT

Report on Companies (Auditors Report) Order, 2016, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act Advanced Micronics Devices Ltd (The company)The Annexure Referred to in Independent Auditors Report to the members of the Company on the financial statements for the year ended 31 March 2017, we report that:

i. In Respect of the companys Property plant & equipment

(a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets.

(b) The fixed assets of the Company have been physically verified by the Management during the year and no material discrepancies have been noticed on such verification. In our opinion, the frequency of verification is reasonable.

(c) The title deeds of immovable properties, as disclosed in the fixed assets to the financial statements, are held in the name of the Company.

ii. The physical verification of inventory has been conducted at periodical intervals by the Management but not effectively conducted during the year. As certified by the management the discrepancies noticed on physical verification of inventory as compared to book records were not material. However, we recommend the Management to conduct the physical verification of inventories on quarterly basis and maintain proper records commensurate to the nature and size of the business.

iii. As per the explanations given to us, the Company has not granted any unsecured loans to the parties listed in the register maintained under Section 189 of the Companies Act.

iv. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Companies Act, 2013 in respect of the loans and investments made, and guarantees and security provided by it.

v. In our opinion, and according to the information and explanations given to us, the Company has not accepted any deposits from the public.

vi. Reporting under clause 3(vi) of the order is not applicable as the companys business activities are not covered by the companies (cost records and audit) rule, 2014.

vii. We have broadly reviewed the records maintained by the Company pursuant to the rules prescribed by Central Government for maintenance of cost records under subsection 1 of Section 148 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

viii. According to the information and explanations given to us and the records of the Company examined by us, company has generally not been regular in depositing undisputed statutory dues likes ESI, Provident Fund, Service Tax Etc. According to the information and explanation given to us, there are no undisputed amounts payable in respect of Customs Duty, Excise Duty, Income Tax except below mentioned statutory dues

(Rs in Lakhs)
Service tax	37.76
Professional tax	2.29
ESI	9.94
Provident Fund	5.08
VAT	16.58
Total	71.65

ix. The Company has not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans during the year under review. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the Company.

x. To the best of our knowledge and according to the information and explanations given to us, no fraud by the company and no material fraud on the company by its officers or employees has been noticed or reported during the year.

xi. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Accounting Standard (AS) 18, Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

xiv. 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 is not applicable to the Company.

xv. The Company has not entered into any non-cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order is not applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order is not applicable to the Company.

For B. V. Swami & Co.,

Chartered Accountants

[A. AMARANATH]

Place: Bangalore Partner

Date: 30/05/2017 Membership Number: 213629

Firm Reg Number: 009151S

ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT - 31ST MARCH, 2017

(Referred to in our report of even date)

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUBSECTION 3 OF SECTION 143 OF THE ACT OF THE Advanced Micronics Devices Ltd.

We have audited the internal financial controls over financial reporting of Advanced Micronics Devices Ltd ("the Company"), as of 31 March, 2017 in conjunction with our audit of the Ind AS 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 controls over financial reporting criteria established by the Company considering the essential components of internal controls 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 Companies Act 2013 ("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 ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain 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 controls based on the assessed risk. 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.

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 control system over financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A companys internal financial controls 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 controls 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 controls 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 control system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2017, based on the internal controls over financial reporting criteria established by the Company considering the essential components of internal controls stated in the Guidance Note.

For B. V. SWAMI & CO.,

Chartered Accountants

[ A. AMARANATH]

Place: Bangalore Partner

Date :30/05/2017 Membership Number: 213629

Firm Reg Number: 009151S