To the Members of ECS BIZTECH LIMITED
Ahmedabad.
Report on the Audit of the financial statements Opinion
We have audited the accompanying financial statements of ECS BIZTECH LIMITED ( the
Company), which comprise the balance sheet as at 31st March 2021, and the
statement of Profit and Loss (including other comprehensive income), statement of changes
in equity and 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 (hereinafter referred to as ‘financial statements’).
In our opinion and to the best of our information and according to the explanations
given to us, the aforesaid financial statements give the information required by the
Companies Act, 2013 (The Act) in themanner 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 the Companies (Indian Accounting Standards) Rules, 2015, as amended, ( Ind AS )
and other accounting principles generally accepted in India, of the state of affairs of
the Company as at March 31, 2021, and loss and other comprehensive income, changes in
equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified
under section M3(10) of the Companies Act, 2013. Our responsibilities under those
Standards are further described in the Auditor’s 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.
Material Uncertainty Related to Going Concern.
The Company had losses during the previous year and has continued to incur losses
during the current year, primarily due to lower volumes, impairment losses, and finance
costs which have resulted in negative net worth during the year and as at March 31, 2021.
The net current liabilities as at March 31 2021 were 11.13 Crore. Further, the Company has
defaulted in repayment of principal of Rs. 2.70 crore and interest payable to lenders in
respect of its term loans OTS as on March 31, 2021, and has also defaulted in making
payments to certain overdue creditors. The aforesaid conditions indicate liquidity stress
and existence of a material uncertainty that may cast significant doubt about the
Company’s ability to continue as a going concern.
The Board of directors has evaluated these conditions and has advised the management to
take measures to improve liquidity condition of the Company. The Company is working
thereon. The Companys ability to continue as a going concern is solely dependent on
successful outcome of the Management’s plans. The Management is confident of
obtaining the required approvals of the lenders and shareholders as stated above for
raising adequate resources to meet its financial obligations and continuing business
operations in the foreseeable future. .
Accordingly, these financial statements have been prepared on the basis that the
Company will continue as a going concern and no adjustments have been made to the carrying
values (including adjustment on account of impairment)
Emphasis of Matter
(1) We draw attention to note No. 26(5) of the financial statement with that the
company has not offered any formal plans or agreements with individual employees, group of
employees or their representatives for retirement benefits, hence its recognition,
measurement and disclosures are not made.
(2) We draw attention to note No. 26(8) Company has not provided the interest liability
for the outstanding Negotiated Settlement amount of Rs. 2.70 cores. Company is in process
to settle the issue. Hence interest liability not provided. So its recognition,
measurement and disclosures are not made.
(3) We draw attention to Note 26(12) of the financial statement, which describes that
the potential impact of COVID-19 pandemic on the financial results of the Company is
dependent on future developments, which remain uncertain.
Our opinion is not modified in respect of above matters.
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. For each matter below, our description of how our audit
addressed the matter is provided in that context.
| Company had losses during the previous year and has continued to incur losses during
the year, primarily due to lower volumes, impairment losses, which have resulted in
negative net worth during the year and as at March 31, 2021. We focused on this area due
to the significance of management judgments adopted in assessing the material
uncertainties related to going concern. |
We performed the following principal audit procedures in relation to managements
assessment of going concern: |
|
a) Evaluation of design and implementation of the control relating to managements
assessment of impairment of going concern. |
|
b) Tested the controls relating to managements assessment of going concern. |
|
c) Evaluation of the appropriateness of identification of material uncertainties. d)
Analysed and discussed cash flow, profits and other relevant forecasts with management. |
|
e) Analysed impact of the default on the covenants and its impact on the company cash
How for the purpose of the going concern assessment. |
|
Q Assessed the sensitivities and stress testing on the future cash flows that
management has considered for the going concern assessment. |
|
g) Evaluated disclosure in the financial statements of the Material Uncertainty
Related to Going Concern and the related compliance with the requirements of the standard
on auditing and applicable reporting. |
| (2) Trade receivable Balances Written off of Rs.2,24,31.559 as on 31s-
March 2021. Managements judgment is involved in identifying impairment of the receivable
which has an adverse impact on the profit of the company. |
ajObtained an understanding the process adopted by the Company for calculation,
recording and monitoring of the impairment loss recognized for expected credit loss; |
|
b) We assessed and tested the design and operating effectiveness of key controls over
completeness and accuracy of the key inputs and assumptions considered for calculation,
recording and monitoring of the impairment loss recognized. Also, evaluated the controls
over the modelling process, validation of data and related approvals. |
|
c) We discussed with the management about the conditions leading to, and their
assessment of recoverability of dues from the parties and also referred to the available
communication, if any, between them. |
|
d) We referred to the aging of trade and other receivables and discussed the key
balances to establish the managements assessment of recoverability of such dues. |
Ollier Information
The Company’s Board of Directors is responsible for the other information. The
other information comprises the information included in the Boards report including
Annexure to Boards Report but does not include the financial statements and our auditors
report thereon.
Our opinion on the financial statements does not cover the other information and we do
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 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. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information; we
are required to report that fact. We have nothing to report in this regard.
Managements Responsibility for the 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
accounting principles generally accepted in India, including the accounting Standards
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
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 auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with
SAs will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and
maintain professional 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. Under section 143(3)(i)
of the Companies Act, 2013, we are also responsible for expressing our opinion on whether
the company has adequate internal financial controls system in place and the operating
effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
• 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 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.
• Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
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 of the
current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditors Report) Order, 2016 ("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.
2) 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 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 lnd AS specified
under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on 31i{
March, 2021 taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March, 2021 from being appointed as a director in terms
of Section 164 (2) of the Act.
(0 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 explanations given to us:
(i) The Company has disclosed the impact, if any, of pending litigations as at March
31, 2021 on its financial position in its financial statements for the year ended March
31, 2021
(ii) flic Company did not have any long-term contracts including derivative contracts
for which there were any material foreseeable losses.
(iii) There were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company
Amiexm e A to tlie Independent Auditors Report
Referred to in paragraph 1 of the Independent Auditors’ Repoit of even date to the
members of ECS Biztech Limited on the financial statements for the year ended March
31,2021
1. liLi C5iJt olFixed Assets:
(a) The Company is in the process of maintaining fixed asset register showing full
particulars including quantitative details and situation of fixed assets.
(b) As explained to us, physical verification of major fixed assets has been conducted
by the management at appropriate intervals. In our opinion, the programme is reasonable
having regard to the size of the Company and the nature of the fixed assets. According to
information and explanations given to us, no material discrepancies have been reported on
such verification.
(c) According to the information and explanations given to us and on the basis of our
examination of the records of the Company, the title deeds of immovable properties are
held in the name of the Company.
2. In respect of Inventories:
In our opinion, the inventories have been physically verified during the year by the
management at reasonable intervals and as explained to us no material discrepancies were
noticed on physical verification.
3. iiuiespect of Loan to parties covered in the register maintained under Scc.189;
The Company has not granted any unsecured loans to companies, firms and other parties
covered in the Register maintained u/s 189 of the Act, lienee the provision of clause
(iii) (a), (b) and (c) of paragraph 3 of the Order are not applicable.
4. In_respcct of Loa.nSj_[jiYs:mcnts, guarantees complied with section 185 & 186:
In our opinion and according to the information and explanations given to us, the
Company does not have any transactions to which the provisions of Section 185 apply. The
Company has compiled with the provisions of Section 186 of the Act, with respect to the
loans, investments, guarantees and security.
5. Ijixespectp f. d e uagjJL fLQllUhibilc:
The Company has not accepted deposit from the public within the meaning of Sec.73 to 76
and other relevant provisions of the Act and rules framed there under.
6. In respect of maintenance of cost records:
According to the information and explanations given to us, the Central Government has
not prescribed maintenance of cost records under sub-section (1) of Sec.148 of the
Companies Act, 2013.
7. In respect of statutory dues:
(a) According to the records of the Company, the Company is not regular in depositing
with appropriate authorities undisputed statutory dues including Provident Fund, Employees
State Insurance, Income Tax, Value Added Tax, Service Tax, Goods and Service Tax and other
material statutory dues applicable to it. According to the information and explanations
given to us, the amounts of undisputed amounts payable in respect of the aforesaid dues as
outstanding as at 31st March, 2021 fora period of more than six months from the
date of becoming payable are as under:
| Nature of Statute |
Nature of Duly |
Period to which the amount relates |
Amount Its. |
Due Date |
Date of Payment |
| TDS Defaults |
Income Tax |
Various Years |
5,17,900 |
Various Dates |
Not yet paid |
| Gujarat State Taxes on Profession, Traders and Callings and Employments Act 1976 |
Professional Tax |
2018-19 and earlier years |
3,94,099 |
Various Dates |
Not yet paid |
| Gujarat State Taxes on Profession, Traders and Callings and Employments Act 1976 |
Professional Tax |
2019-20 |
52,330 |
Various Dates |
Not yet paid |
| Gujarat State Taxes on Profession, Traders and Callings and Employments Act 1976 |
Professional Tax |
2020-21 |
48,150 |
Various Dates |
Not yet paid |
(b) According to the records of the Company, there were no disputed statutory dues in
respect of sales tax, wealth tax, customs duty and cess, excise duty which have not been
deposited, except the following particulars of income-tax dues not deposited by the
Company on account of dispute as at March 31, 2021:-
| Nature of the statue |
Nature of the dues |
Amount in Rs. |
Period to which amount relates |
Forum Where dispute is pending/Status of Demand |
| Income-tax Act |
Income-tax u/s220(2) |
94,389 |
2012-13 |
CPC(DTVSV filed as on 31.3.2021 and approved on 29.04.2021) |
| Income-tax Act |
Income-tax u/s221(3) |
13,93,400 |
2012-13 |
CPC(DTV$V filed as on 31.3.2021 and approved on 29.04.2021) |
| Maharashtra VAT |
Sales Tax Demand |
20,38,740.4 |
2013-14 |
Deputy Commissioner of State Tax(Appeal Filed Against The Demand) |
8. Li respect of dues to financial institntion/bnnUs/debentures:
In our opinion and according to tlie information and explanations given to us, the
Company has not defaulted in the repayment of loans or borrowings to financial
institutions and banks except as under: Particulars Amount of default of repayment Period
of default
| Name of Lender |
Amount |
Period of Default up to 31st March 2021 |
| Edelweiss Assets Reconstruction Company Limited, in its capacity as trustee of EARC
Trust -5C156 |
270 Lakhs |
Rs.28 Lakhs for 655 days. And Rs.242 Lakhs for 563 days. |
The Company does not have any borrowing from government nor has issued any debentures.
9. In respect of application of term I o a ns;
The Company has not raised any moneys by way of initial public offer, further public
offer and term loans. Accordingly, the provisions of Clause 3(ix) of the Order are not
applicable to the Company.
10. in respect of fraud:
Based upon the audit procedures performed for tlie purpose of reporting the true and
fair view of the financial statements and as per tlie information and explanations given
by the management, we report that no fraud on or by the Company have been noticed or
reported during the year.
11. In respect of Managerial Remuneration:
According to the information and explanation given to us and tlie books of accounts
verified by us, the managerial remuneration has been paid or provided in accordance with
the requisite approvals mandated by the provisions of Section 197 read with the Schedule V
to the Act.
Tlie company is not a Nidhi Company; hence the provisions of Clause 3(xii) are not
applicable to the Company.
13. In respect of Related Parties Transactions:
According to the information and explanations given to us and based on our examination
of the records of the Company, transactions with the related parties are in compliance
with sections 177 and 188 of Companies Act, 2013 where applicable and details of such
transactions have been disclosed in the Financial Statements as required by the applicable
accounting standards.
14. In Respect of Pi efei ential Allotment/ Private Placement:
According to the information given to us, during tlie year the Company has not made any
preferential allotment as private placement of shares or fully or partly convertible
debentures, hence the provisions of clause 3(xiv) are not applicable to the Company.
15. Jn_Eg.SP.gCt of Noil-cash Ti nnsaction;
According to the information and explanation given to us and the books of accounts
verified by us, the company has not entered into any non-cash transaction with directors
or person connected with him.
16. Ill respect of section 45 IA of RBI Act. 1934:
The Company is not required to be registered under Section 4 5 -1A of the Reserve Bank
of India Act, 1934
Annex me B to the Independent Auditors* Report:
Referred to in paragraph 2(f) of the Independent Auditors Report of even date to the
members of ECS Biztech Limited on the financial statements for the year ended March 31,
2021
Report on the.internal Financial Controls under Clause (!) of Sub section 3 of Section
143 of the Act;
We have audited the internal financial controls over financial reporting of ECS Biztech
Limited ("the Company ) as of March 31, 2021 in conjunction with our audit of the
financial statements of the Company for the year ended on that date.
Man age m ents Resp onsibilitv for Internal Financial Co ntrols:
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 (the
Guidance Note ) 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 and the Standards on Auditing 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 control 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 audit opinion on the Company’s internal financial control
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 authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of
unauthorised acquisition, use, or disposition of the companys assets that could have a
material effect on the financial statements.
Inherent Limitations ^/1nternal Financial Contrqjs over FinanciaI 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 may 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 control system over financial reporting and such internal financial controls
over financial reporting were operating effectively as at March 31, 2021, 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 issued by the
Institute of Chartered Accountants of India.
+91-9892691696
