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The Members of AKSH OPTIFIBRE LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Aksh Optifibre Limited (the Company), which comprise the Balance Sheet as at 31 March 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.
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 accounting principles generally accepted in India including Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, of the state of affairs (financial position) of the Company as at 31 March 2019, 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 for Opinion
We conducted our audit of the standalone financial statement in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the 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 thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. 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.
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.
|Trade Receivables from a Central Government Entity|
|The Company has trade receivables of Rs. 8,565.30 lakhs from a Public Sector Entity, owned by the Government of India, in the telecommunications sector. The Company has taken necessary steps for the recovery of the amount due.||Our procedures included, but were not limited to, the following:|
|Considering that the amount is due from a Central Government Entity, and based on past experience of realisation and steps taken by the Company for recovery, it is confident of recovering the balance amount in due course.||? Evaluated various correspondences made by the Company with the Central Government Entity and other follow up actions taken by the Company, including but not limited to legal process, meetings, notices, etc.|
|? Evaluated the underlying documents against which these amounts are accrued as per eligibility criteria.|
|This matter has been considered as a key audit matter considering the significance of recoverability of such trade receivable to the Companys financial statements.||? Obtained representation from the management regarding recoverability of these amounts.|
|The management of the Company has assessed that a provision for impairment is not required towards the amount recoverable from the Central Government Entity.||As a result of the above audit procedures, the managements assessment of impairment in the amount recoverable from the Central Government Entity was considered to be appropriate.|
|Revenue Recognition on transition to Ind AS 115 Effective April 1,2018, on account of adoption of new revenue standard Ind AS 115 - Revenue from contracts with customer, the company has changed its revenue recognition policy with regard to timing of revenue recognition based on satisfaction of the identified performance obligations. Additionally, the new revenue accounting standard contains disclosures which involve collation of information in respect of disaggregated revenue and period over which the remaining performance obligations will be satisfied subsequent to the balance sheet date.||Our procedures included, but were not limited to, the following:|
|? Obtained an understanding and assessed the design, implementation and operating effectiveness of managements key internal controls with regard to recognition of revenue.|
|Read selected contracts to identify significant terms of the contracts and ? evaluation of contract terms.|
|We focused on this area because a significant portion of the revenue generated requires management to exercise judgement and therefore could be subject to material misstatement due to fraud or error.||? Assessing appropriateness of managements significant judgements in accounting for identified contracts.|
|In addition, first time disclosures required under Ind AS 115 have been identified as an area of focus for the current year.||? Testing of timing of recognition of revenue (including procedures related to cut off) in line with the terms of contracts.|
|? Testing the key management assumptions used to estimate contract cost, contract risks, claims, etc.|
|? Consideration of the adequacy of the disclosures as required to be made by Management under the new standard. Based on above procedures, we did not note any significant exceptions in the estimates and judgements applied by the Management in revenue recognition including those relating to presentation and disclosures.|
Information other than the standalone Financial Statements and Auditors Report thereon
The Companys 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 auditors report thereon. The annual report is expected to be made available to us after the date of this auditors report. 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.
Managements Responsibility for the Standalone Financial Statements
The Companys 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 state of affairs (financial position), profit or loss (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 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 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 Companys 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 Companys financial reporting process.
Auditors Responsibilities for the Audit of the 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 auditors 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 Standards on Auditing 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 Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: i. 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. ii. Obtain an understanding of internal financial 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 explaining our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls. iii. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
iv. Conclude on the appropriateness of managements 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 Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors 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 auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern. iv. 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 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 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 Section 197(16) of the Act, we report that the Company has paid remuneration to its director during the year in accordance with the provisions of and limits laid down under Section 197 read with Schedule V to the Act.
2) As required by the Companies (Auditors Report) Order, 2016 (the Order) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order.
3) Further to our comments in Annexure A, 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 Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account. d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act. e) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 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 (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 the standalone financial statements- Refer note no 40 of the standalone financial statement; ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31 March 2019; iv. The reporting on disclosures relating to the Specified Bank Notes is not applicable to the Company for the year ended March 31, 2019.
|For B G G & Associates|
|CA Alok Kumar Bansal|
|Place: New Delhi||Partner|
|Date: May 25, 2019||Membership No. 092854|
Annexure A to the Independent Auditors Report
(Referred to in paragraph 3 under Report on Other Legal and Regulatory Requirements section of our report to the Member of Aksh Optifibre Limited of even date)
Based on the audit procedures performed for the purpose of reporting a true and fair view on the standalone financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that: (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 explanation given to us, fixed assets except the assets installed at customer premises have been physically verified by the management during the year. No material discrepancies were noticed on such verification. In our opinion, frequency of physical verification of fixed assets is reasonable. The fixed assets have been physically verified by the management during the year. No material discrepancies were noticed on such verification.
(c) According to the Information and explanation given to us and on the basis of examination of books of account and other documents, the title deeds of immovable properties owned by the Company are held in the name of the Company. ii. According to the information & explanation given to us, physical verification of inventory has been conducted at reasonable intervals by the management during the year except for goods in transit. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the book of accounts. iii. According to the information and explanation given to us, the Company had granted unsecured loan to its four wholly owned subsidiaries, covered in the register maintained under Section 189 of Companies Act 2013. (a) In our opinion, the rate of interest and other terms and conditions on which the loan has been granted to its subsidiaries, covered in the register maintained under Section 189 of the Act were not, prima facie, prejudicial to the interests of the Company.
(b) In respect of loans granted to subsidiaries covered under section 189 of the Act, the terms of arrangement for payment of principal and interest are not due. Accordingly, the provisions of paragraph 3 (iii) (b) of the Order are not applicable to the Company (c) In respect of the aforesaid loan, as per the information made available to us, there is no overdue amount as at year end. iv. According to the information & explanation given to us, in respect of loans, investments, guarantees and security, the Company has complied with the provisions of section 185 and I86 of the Companies Act, 2013, to the extent applicable. v. According to the information and explanations given to us, the Company has not accepted any deposits within the meaning of section 73 to 76 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules,2014 (as amended). Accordingly, the provision of clause 3(v) of the Order are not applicable. vi. We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub section (1) of section 148 of the Companies, 2013 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. vii. (a) The Company is regular in depositing undisputed statutory dues including employees state insurance, duty of customs, duty of excise, cess and other material statutory dues, as applicable, with the appropriate authorities except in case of payment of goods and services tax on CIF value of import under reverse charge mechanism , provident fund & in payment of advance income tax installments on due dates. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, Goods & Service Tax, Service Tax, sales tax, custom duty, excise duty and Cess were in arrears, as at 31st March, 2019 for a period of more than six months from the date they became payable except excise duty of Rs.6.06 lakhs & sales tax of Rs.44.01 lakhs.
(b) According to the information and explanations given to us, there are no dues of income tax or Goods & Service Tax or sales tax or service tax or duty of customs or duty of excise or value added tax or cess which have not been deposited on account of any dispute except of the following amounts:
|Name of Statute||Nature of Dues||Disputed||Period to which amount relates||Forum where dispute is pending|
|Amountर In Lakhs|
|Central Excise Act, 1944||Excise Duty||22.35||2010-11||Asst. Commissioner, Bhiwadi|
|Central Excise Act, 1944||Excise duty||32.79||2011-12||Asst. Commissioner, Bhiwadi|
|Central Excise Act, 1944||Excise duty & Penalty||23.76||2012-14||Assistant Commissioner, CGST Division C, Bhiwadi|
|Central Excise Act, 1944||Excise duty & Penalty||3.37||2000-01||CESTAT, New Delhi|
|Central Excise Act, 1944||Excise duty||4.02||2013-14||Assistant Commissioner, Sikar|
|Finance Act, 1994||Service tax & Interest||31.20||November 2006 to August 2008||Honble High Court, Jaipur|
|Finance Act, 1994||Service Tax||0.91||January 2011 to November 2011||Assistant Commissioner, Bhiwadi|
|Finance Act, 1994||Service Tax||28.99||October 2014 to June 2017||Assistant Commissioner, Bhiwadi|
|Income Tax Act, 1961||Income tax||91.01||A.Y 2010-11||CIT (Appeals), Alwar (Rajasthan)|
|Income Tax Act, 1961||Income tax||1.71||A.Y 2015-16||CIT (Appeals), Delhi|
|Provident Fund Act||Provident Fund||7.60||2004-05||Honble High Court, Jaipur|
viii. (a) The Company has defaulted in repayment of following dues to the financial institution and banks during the year, which were not paid as at Balance Sheet date
|Name of Lender||Amountर In Lakhs||Amountर In Lakhs||Period of Default -Maximum days||Period of Default -Maximum days|
|Punjab National Bank||116.75||5.07||15||22|
|Union Bank of India||440.92||29.08||20||10|
(b) The Company has defaulted in repayment of following dues to the financial institution and banks, which were paid on or before the Balance Sheet date:
|Name of Lender||Amountर In Lakhs||Amountर In Lakhs||Period of Default -Maximum days||Period of Default -Maximum days|
|Punjab National Bank||-||9.69||-||4|
|Union Bank of India||110.00||56.70||20||5|
ix. According to the information and explanation given to us and our examination of the records of the Company, the term loans have been applied for the purposes for which they were obtained. The Company has not raised any moneys by way of initial public offer or further public offer (including debt instruments). x. According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit. xi. In our opinion and according to the information and explanations given to us, the Company has paid/provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act. xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of the Order is not applicable to the Company. xiii. In our opinion and according to the information and explanations given to us, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the standalone financial statements as required by the applicable Indian accounting standards. xiv. According to the information & explanation provide to us, the Company has not made any preferential allotment or private placement of shares or fully or partly paid convertible debentures during the year, hence reporting under clause 3 (xiv) of the Order is not applicable to the Company. xv. In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its Directors or persons connected to its directors. Accordingly, the provision of paragraph 3(xv) of the Order are 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 (xvi) of the Order are not applicable to the Company.
|For B G G & Associates|
|CA Alok Kumar Bansal|
|Place: New Delhi||Partner|
|Date: May 25, 2019||Membership No. 092854|