GKB Ophthalmics Ltd Directors Report.

To The Members of GKB Ophthalmics Limited

Report on the Audit of the Standalone financial statements

Opinion

We have audited the accompanying standalone financial statements of GKB Ophthalmics Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flow for the year then ended, and notes to standalone financial statements including a summary of 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, of the state of affairs of the Company as at March 31, 2019, and its loss(financial performance including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis of Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) 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 Standalone 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 Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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.

Description of Key Audit Matters

The Key Audit Matter

How the matter was addressed in our Audit

1 Revenue Recognition

The Companys revenue is derived from sale of unfinished ophthalmic lenses.

Our audit procedures to assess the recognition of revenue included the following –

The Company recognises revenue when performance obligations as per the underlying sales contracts are satisfied.

a. Evaluating the design, implementation and operating effectiveness of internal controls over the existence, accuracy and timing of revenue recognition.

b. Identifying the performance obligations under the contract to validate for the sample of transactions selected that the revenue is recognised and recorded in the period in which the performance obligation is satisfied.

The terms set out in the Companys sales contracts are varied which affect the timing of revenue recognition.

c. Performed substantive transactional testing for a sample of transactions and applied analytical procedures to validate the recognition of revenue.

Revenue recognition was identified as a Key Audit Matter because revenue is one of the key performance indicators and is subject to inherent credit risk and risk of misstatement due to management judgement involved in the timing of revenue recognition.

d. Tested journal entries posted to revenue accounts focusing on unusual or irregular terms, if any.

e. Obtained balance confirmations form major trade receivables and checked the subsequent realisation for the sample of trade receivables post balance sheet date.

2 Contingent Liabilities

Our audit procedures included –

The Company has disputed demands and penalty relating to excise duty in connection with valuation of products manufactured by the Company, sales tax, entry tax and income tax. These disputes are currently pending before the Customs, Central Excise and Service Tax Appellate Tribunal (CESTAT) / Commissioner of Central Excise and Service Tax, Commissioner of Commercial Tax and Commissioner of Income Tax.

a. Holding discussions with the Companys personnel responsible for the Companys defence in these matters to understand their legal views.

b. Verifying the submission made by the management in these cases and their interpretation of the matter.

Given the uncertainty involved in the appeals, the ultimate outcome of these matters cannot be predicted with virtual certainty.

c. Verifying the documents related to the matters to understand the findings of the revenue authorities and to assess the representations of management. Verifying the disclosures of disputed demand in the financial statements.

Further, whether the Company is successful or not in these matters, the ultimate decision of the courts will have a material effect on the financial position, results of operations and cash flows.

Management have engaged independent legal counsel on these matters.

The accounting for, and disclosure of, this contingent liability is complex and is a significant matter in our audit because of the judgements required to determine the level of certainty in the matter.

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 Directors Report including Annexures, but does not include the standalone financial statements and our auditors report thereon.

Our opinion on the standalone 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 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 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.

Responsibilities of Management and Those Charged with Governance 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 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 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, the board of directors are 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 the board of directors 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 Standalone financial statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements, taken 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 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 standalone financial statements.

We give in “Annexure A” a detailed description of Auditors responsibilities for Audit of the Standalone financial statements.

Other Matter

The standalone financial statements of the Company for the year ended March 31, 2018, were audited by another auditor whose report dated May 08, 2018 expressed an unmodified opinion on those statements.

Our opinion is not modified in respect of these matters.

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 B” 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), the Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies (Indian Accounting Standards) Rules, 2015, as amended.

(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 C”.

(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 of pending litigations on its financial position in its standalone financial statements – Refer Note 38 to the standalone financial statements.

ii. The Company did not have any long term contracts, including derivative contracts, for which there were material foreseeable losses.

iii. Unpaid dividend of Rs. 12,822/- pertaining to financial year 2010-11 has not been transferred to investor education and protection fund as on March 31, 2019 in accordance with the provisions of the Companies Act, 2013 and rules made thereunder.

3. In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the year is within the limit prescribed under section 197 of the Act and the rules thereunder.

For MSKA & Associates

Chartered Accountants

ICAI Firm Registration No. 105047W

Vinayak M Padwal

Place: Mapusa, Goa

Partner

Date: May 30, 2019

Membership No.049639