Aplab Auditors Report


To the Members of

Aplab Limited

Report on the Audit of the Financial Statements

Qualified Opinion

We have audited the accompanying Standalone Indian Accounting Standard ("Ind AS") financial statements of Aplab Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2023, and 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 then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information for the year ended on that date.

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in Basis for Qualified Opinion section of our report, the aforesaid financial statements prepared by the Company 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 Indian Accounting Standards prescribed under section 133 of the Act read with Companies (Indian Accounting Standard) Rules 2015, as amended and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2023, and its net profit and other comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

The Company has not computed Impairment Loss, if any nor made necessary provisions as required under Ind AS 36. The Company has also not provided for impairment of receivables from customers as required under Ind AS 109 based on Expected Credit Loss (ECL) and interest on amount payable to Micro, Small and Medium Enterprises included in trade payables that are outstanding for more than 45 days as applicable under Micro, Small and Medium Enterprises Development Act,2006. The effect of these non-compliances has not been quantified by the Company. Accordingly, we are unable to report the impact on the net income for the year and shareholders funds as at March 31,2023

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 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.

Emphasis of Matter

a. The Company has accumulated losses and its net worth has continued to remain negative at Rs. 1981.42lakhs at this year end. The Company during the year could not pay various statutory dues in time. The Unpaid Statutory Dues amounted to Rs. 485.71 lakhs and separated employee Unpaid Gratuity / other dues are Rs. 642.73lakhs at the year end.

b. This situation has resulted in Company facing difficulty to generate adequate operational inflows to finance its activities and to continue as a going concern. The promoters have advanced substantial unsecured loans including unpaid interest of Rs. 3111.96 lakhs to sustain operations. During the year, the Company has obtained Shareholders approval for conversion of unsecured loans from promoters into Equity Shares and Compulsorily Convertible Preference Shares, the approval of which is awaited from SEBI, which if approved, will result in net worth being positive

Our opinion is not modified on the above matters.

Key Audit Matters

Key Audit Matters (‘KAM) 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.

Key Audit Matters How our audit addressed the Key Audit Matters
Unpaid Gratuity / other dues payable to separated employees on retirement/ resignation amounting to Rs. 642.73 lakhs are outstanding at the year end. No interest has been provided on these outstanding. The management has stated that due to non availability of funds liabilities could not be paid when due. The liabilities are being paid as and when some funds are available.
The Company has not funded Gratuity Policy to the extent of Rs. 875.06 lakhs. The company has obtained Actuarial valuation of Employee Benefits ( Gratuity )as per Ind AS 19 and made necessary provision in the financial statements.

Information Other than the Standalone Financial Statements and Auditors Report Thereon

a) The Companys Management and Board of Directors are responsible for the preparation of the other information. The other information comprises the information included in the Annual Report but does not include the Standalone Financial Statements and our auditors report thereon. The other information is expected to be made available to us after the date of this auditors report.

b) Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

c) In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

d) When we read the Other Information, if, we conclude that there is a material misstatement therein, we are required to communicate the matters to those charged with governance as required under SA 720 (Revised) "The Auditors Responsibilities Relating to Other Information".

Responsibility of Management for 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 financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the Ind AS and 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 financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the 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.

Those 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 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 Standard 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 SAs, we exercise professional judgment and maintain professional scepticism 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, but not for the purpose of expressing an opinion on the effectiveness of the companys internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.

• Conclude on the appropriateness of the 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 financial results 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.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial results represent the underlying transactions and events in a manner that achieves fair presentation.

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 financial statements for the financial year ended March 31, 2023, 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

As required by the Companies (Auditors Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

As required by Section 143(3) of the Act, we report that:

(a) Subject to our remarks in the Basis for qualified opinion paragraph, 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, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid 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 31st March, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2023 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".

(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 has not provided the impact of pending litigations in its financial statements. The total value of such litigations has been given in para vii(b) of the Annexure A to this report 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. Rs. 7.71 lakhs is remaining 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, other than as disclosed in the notes to the accounts, 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 person(s) or entity(ies), 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, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), 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 audit procedures which we 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 misstatement.

v. The company has not declared or paid any dividend during the year. Hence, there is no requirement to comply with section 123 of the Companies Act, 2013.

vi. As proviso to rule 3(1) of the companies (Accounts) Rules, 2014 is applicable for the company only w.e.f. April, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules 2014 on using accounting software which has a feature of recording audit trail (edit log) facility is not applicable.

Annexure "A" to Independent Auditors Report

Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements section of our report of even date

Report on Companies (Auditors Report) Order, 2016 ("the Order" or "CARO 2020") issued by the Central Government in terms of Sec 143(11) of the Companies Act, 2013 of Aplab Limited ("the Company").

We report that:

1) (a) (A) The Company is in the process of updating proper records showing full particulars including quantitative details and situation of Property, Plant and Equipment.

(B) The Company has maintained proper records showing full particulars of intangible assets.

(b) All Property, Plant and Equipment have not been fully physically verified by the management during the year as per the program. However we are informed that discrepancies observed during physical verification have been properly dealt with in books of accounts.

(c) The title deeds of all the immovable properties(other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the Company.

(d) The Company has not revalued its Property, Plant and Equipment or Intangible Assets during the year ended 31st March 2023.

(e) According to the information and explanations given to us and based on management representations, there are no proceedings initiated or are pending against the Company as at 31st March, 2023 for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.

2) (a) The management has conducted physical verification of inventory at reasonable intervals during the year. In our opinion, the procedure for verification by the management is reasonable. In our opinion, the coverage of the verification needs to be substantially improved at the regional offices. Discrepancies on such physical verification were less than 10% in aggregate for each class of inventory and have been properly dealt with in the books of accounts.

(b) The Company has been sanctioned working capital limits in excess of Rs. Five crores from bank on the basis of security of current assets. The discrepancies observed in the quarterly statements filed by the company with such bank as compared with the books of accounts are given below:

i) Discrepancies observed in the quarterly figures of Stock filed with the Bank as compared with Books of accounts:

Sr. Quarter ended Stock Amount as per Books of accounts (Rs. in Lakhs) Stock Amount as per statements filed with Bank (Rs. In Lakhs)
1 June 2022 23,74.84 24,02.49
2 September 2022 23,61.33 23,74.70
3 December 2022 24,13.52 22,68.97
4 March 2023 24,72.74 24,02.06

ii) Discrepancies observed in the quarterly figures of Sundry Debtors filed with the Bank as compared with Books of accounts:

Sr. Quarter Ended No. Sundry Debtors Amount as per Books of accounts (Rs.in Lakhs) Sundry Debtors Amou statements filed with Bank nt as per Rs. In Lakhs)
0 to 90 days 91 to 180 days Above 180 days 0 to 90 days 91 to 180 days Above 180 days
1 June 2022 423.24 459.20 812.97 553.91 359.43 924.75
2 September 2022 309.40 76.85 1211.01 423.58 152.60 1174.12
3 December 2022 360.03 -32.42 1307.15 471.90 55.34 1208.55
4 March 2023 883.06 -6.09 1316.60 1262.06 11.82 1284.43

3) (a) During the year the Company has not provided loans, advances in the nature of loans, stood guarantee or provided security to companies, firms, Limited Liability Partnerships or any other parties. Accordingly, the requirement to report on clause 3(iii)(a) of the Order is not applicable to the Company.

(b) During the year the Company has not made investments, provided guarantees, provided security and granted loans and advances in the nature of loans to companies, firms, Limited Liability Partnerships or any other parties. Accordingly, the requirement to report on clause 3(iii)(b) of the Order is not applicable to the Company.

(c) The Company has not granted loans and advances in the nature of loans to companies, firms, Limited Liability Partnerships or any other parties. Accordingly, the requirement to report on clause 3(iii)(c) of the Order is not applicable to the Company.

(d) The Company has not granted loans or advances in the nature of loans to companies, firms, Limited Liability Partnerships or any other parties. Accordingly, the requirement to report on clause 3(iii)(d) of the Order is not applicable to the Company.

(e) There were no loans or advance in the nature of loan granted to companies, firms, Limited Liability Partnerships or any other parties. Accordingly, the requirement to report on clause 3(iii)(e) of the Order is not applicable to the Company.

(f) The Company has not granted any loans or advances in the nature of loans, either repayable on demand or without specifying any terms or period of repayment to companies, firms, Limited Liability Partnerships or any other parties. Accordingly, the requirement to report on clause 3(iii)(f) of the Order is not applicable to the Company.

4) There are no loans, investments, guarantees, and security in respect of which provisions of Sections 185 and 186 of the Companies Act, 2013 are applicable and accordingly, the requirement to report on clause 3(iv) of the Order is not applicable to the Company.

5) According to the information and explanations given to us, the Company has not accepted deposits or amounts which are deemed to be deposits from the public in terms of directives issued by Reserve Bank of India and provisions of Sections 73 to 76 of the Companies Act, 2013 during the year. However in the past the Company had taken public deposits and all these deposits have already matured. The Company is yet to repay matured public deposits of Rs.9.89 lakhs including interest of Rs. 1.33 lakhs as on 31stMarch,2023, due to non receipt of necessary documents from the deposit holders.

6) As informed to us, Company is not required to maintain cost records pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government u/s 148 (1) of the Companies Act, 2013 since the company is registered under MSME Act.

7) (a) According to the information and explanations given to us and the records available, undisputed statutory dues including Goods and Service tax, provident fund, employees state insurance,income tax, sales tax, service tax, duty of custom, duty of excise, value added tax, cess have not been regularly deposited by the company with the appropriate authorities and there have been serious delays in large number of cases. Further, according to the information and explanations given to us, the statement of undisputed statutory dues outstanding as of 31st March, 2023 for a period of more than six months from the date they became payable is as follows -

Nature of Statute Nature of Dues Amount (In Lakhs) Period to which the amount relates
The Employees Provident Funds And Miscellaneous Provisions Act, 1952 Provident Fund 210.15 April 2020 to August 2022
Service Tax Act, 1994 Service Tax 1.18 April 2016 to June 2017
Income Tax Act, 1961 TDS 133.18 June 2016 to August 2022
MVAT Act, 2002& CST Act, 1956 VAT & CST 4.83 April 2016 to March 2017
Employees State Insurance Act, 1948 ESIC 2.25 January 2021 to August 2022
Total 351.59

(b) According to the information and explanations given to us and on the basis of our examination of records of the company, the dues of Goods and Service tax, provident fund, employees state insurance, income tax, sales tax, service tax, duty of custom, duty of excise, value added tax, cess which have not been deposited with the appropriate authorities on account of any dispute as at 31stMarch, 2023 are as follows:

Nature of Dues Rs. in Lakhs F.Y. Forum where dispute is pending
Sales Tax 6.11 2002-03 Dy. Commissioner Appeals, New Delhi.
Sales Tax 2.10 2003-04 Dy. Commissioner Appeals, New Delhi.
Sales Tax 2.18 2004-05 Joint Commissioner Appeals, New Delhi.
Sales Tax 3.48 2004-05 Joint Commissioner Appeals, New Delhi.
Sales Tax 0.83 2005-06 Additional Commissioner Grade II, Appeal III, Commercial Taxes (Lucknow)
Sales Tax 1.70 2006-07 Additional Commissioner Grade II, Appeal III, Commercial Taxes (Lucknow)
Sales Tax 1.09 2007-08 Additional Commissioner Grade II, Appeal III, Commercial Taxes (Lucknow)
Sales Tax 3.55 2008-09 Sales Tax Tribunal - Mumbai VAT
Sales Tax 109.15 2008-09 Sales Tax Tribunal - Mumbai VAT
Income Tax 336.96 2010-11 Commissioner of IT Range 1
Income Tax 75.12 2011-12 CIT II Thane
Income Tax 420.51 2017-18 CIT II Thane (AST and ITBA)
Total 962.78

8) According to the information and explanations given to us, no transaction which was not recorded in the books of account have been surrendered or disclosed as income by the Company during the year in the tax assessments under the Income Tax Act, 1961.Accordingly, the requirement to report on clause 3(viii) of the Order is not applicable to the Company.

9) (a) According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of loans or other borrowings or in the payment of interest to any lender.

(b) According to the information and explanations given to us, the Company has not been declared wilful defaulter by any bank or financial institution or any other lender.

(c) According to the information and explanations given to us, the Company has not taken any term loans during the year except Inter corporate Deposit of Rs. 110.00 lakhs obtained during the year which was utilized for the purpose for which it was obtained.

(d) According to the information and explanations given to us funds raised on short term basis have not been utilized for long term purposes and hence clause 3(ix) (d) is not applicable to the Company.

(e) According to the information and explanations given to us, the Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures.

(f) According to the information and explanations given to us, the company has not raised any loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies.

10) (a) In our opinion and according to the information and explanations given to us, the Company has not raised moneys by way of initial public offer or further public offer during the year.

(b) During the year, the Company has obtained Shareholders approval for conversion of unsecured loans from promoters into Equity Shares and Compulsorily Convertible Preference Shares, the approval of which is awaited from SEBI.

11) (a) According to the information and explanations given to us and on the basis of representation of the management which we have relied upon, no fraud by the Company or on the Company has been noticed or reported during the year.

(b) During the year, no report under sub-section (12) of section 143 of the Companies Act 2013 has been filed by secretarial auditor or by us in Form ADT 4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government.

(c) According to the information and explanations given to us and on the basis of representation of the management which we have relied upon, there are no whistle-blower complaints received during the year by the company.

12) (a) The Company is not a Nidhi Company as per the provisions of the Companies Act, 2013. Therefore, the requirement to report on clause 3(xii)(a) of the order is not applicable to the Company.

(b) The Company is not a Nidhi Company as per the provisions of the Companies Act, 2013. Therefore, the requirement to report on clause 3(xii)(b) of the order is not applicable to the Company.

(c ) The Company is not a Nidhi Company as per the provisions of the Companies Act, 2013. Therefore, the requirement to report on clause 3(xii)(c) of the order is not applicable to the Company.

13) In our opinion and according to information & explanations given to us, the Company is in compliance with sections 177 and 188 of Companies Act, 2013 ("the Act"), for a few of the transactions with Related Parties. The details of related party transactions have been disclosed in the financial statements as required by the applicable accounting standards. However, documentation for determining arms length in connection with Related Party transaction is not maintained. It is informed that company takes approval of Audit Committee and Board of Directors for Related Party transactions during the year.

14) (a) The Company has an internal audit system commensurate with the size and nature of its business.

(b) The internal audit report of the Company issued till date of the Audit report, for the period under audit have been considered by us.

15) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with its directors or persons connected with them and hence requirement to report on clause 3(xv) of the Order is not applicable to the Company.

16) (a) The provisions of the section 45 -IA of the Reserve Bank of India Act,1934 (2 of 1934) are not applicable to the Company. Accordingly, the requirement to report on clause 3 (xvi) (a)of the Order is not applicable to the Company.

(b) According to the information and explanations given to us, the Company has not conducted any Non-Banking Financial or housing finance activities without obtaining a valid Certificate of Registration (CoR) from the Reserve Bank of India as per Reserve Bank of India Act, 1934

(c) According to the information and explanations given to us, the Company is not a Core Investment Company as defined in the regulations made by the Reserve Bank of India. Accordingly, the requirement to report on clause 3 (xvi) (c)of the Order is not applicable to the Company.

(d) In our opinion, there is no core investment company within the Group (as defined in the Core Investment Companies (Reserve Bank) Directions, 2016) and accordingly reporting under clause 3(xvi)(d) of the Order is not applicable.

17) The company has not incurred cash losses in the financial year ended 31st March 2023 and immediately preceding financial year.

18) There has been no resignation of the Statutory Auditor during the year and accordingly requirement to report on Clause 3(xviii) of the Order is not applicable to the Company.

19) According to the information and explanations given to us and on the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements, our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumptions,we believe that materialuncertainty exists as on the date of the audit report that company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date.

20) (a) According to the information and explanations given to us and on the basis of our examination of the records, the company is not liable to contribute towards Corporate Social Responsibility (CSR) as specified in Section 135 of the Companies Act Accordingly, reporting under clause 3(xx)(a) of the Order is not applicable for the year.

(b) According to the information and explanations given to us and on the basis of our examination of the records, the company is not liable to contribute towards Corporate Social Responsibility (CSR) as specified in Section 135 of the Companies Act. Accordingly, reporting under clause 3(xx)(b) of the Order is not applicable for the year.

Annexure - B

Annexure to the Independent Auditors Report of even date on the Standalone Financial Statements of Aplab Limited

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

We have audited the internal financial controls over financial reporting of Aplab Limited, as of 31st March, 2023 in conjunction with our audit of the 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. 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.

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 and the Standards on Auditing, to the extent applicable to an audit of internal financial controls, 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 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 control 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 adverse 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) pertains 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.

Qualified Opinion

According to the information and explanations given to us and based on our audit, the following material weaknesses have been identified as at 31stMarch, 2023:

(a) The Company did not have appropriate internal controls for periodic reconciliation of physical inventory with the inventory records, which may have resulted in misstatement of inventory values in the books of account.

(b) The internal financial control over Service Income is inadequate in terms of In Warranty &Out of Warranty / AMC billing, consumption of spares and its invoicing, follow up on renewals etc.

(c) Documentation for establishing arms length pricing with related party transactions was found to be inadequate.

(d) Inadequate internal controls in recording of financial transactions including Bank, Receivables, Payables and other account reconciliations.

(e) The Company has not computed Impairment Loss, if any nor made necessary provisions as required under Ind AS 36. Further, the Company has also not provided for impairment of receivables from customers as required under Ind AS 109 based on Expected Credit Loss (ECL) and interest on amount payable to Micro, Small and Medium Enterprises included in trade payables that are outstanding for more than 45 days as applicable under Micro, Small and Medium Enterprises Development Act,2006.

A ‘material weakness is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis.

In our opinion, except for the effects / possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and such Internal financial Controls over financial reporting were operating effectively as of March 31,2023, 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.

We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2023standalone financial statements of the Company, and these material weaknesses do not affect our opinion on the standalone financial statements of the Company.

For Puranik Kane & Company Chartered Accountants (ICAI Firm Reg. No. 120215W)

Ashish Ashok Kane

Partner

M. No. 104076

UDIN :23104076BGYDBZ4196

Place: Thane Date: 30-05-2023