Kids Medical Systems Ltd Auditor Reports

TO THE MEMBERS OF KIDS MEDICAL SYSTEMS LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements KIDS MEDICAL SYSTEMS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March 2024, the Statement of Profit and Loss, and the Statement of Cash Flows for the year then ended, and summary of the significant accounting policies and other explanatory information.

Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the financial statements for the year ended 31st March 2024.

Basis of Disclaimer of Opinion

We have conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Our responsibility under those Standards are further described in Auditors Responsibility for the Audit of the standalone financial statements section of our report. We are independent of the company in accordance of with code of ethics issued by ICAI together with the independence requirement that are relevant to our audit of standalone financial statement under the provisions of the Act and the rules made there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics.

In the course of carrying out our audit, we have attempted to obtain sufficient and appropriate audit evidence to satisfy ourselves that the items reflected in the financial statements are fairly stated, but failed:

1. We have relied on the management representation for the existence and valuation of Fixed Asset. The Company has not charged depreciation on the fixed assets during the year and accordingly the provision of Accounting Standards relating to depreciation and Deferred Tax Asset / Liabilities have not been followed.

2. We have not been provided with the balance confirmation or any other details for the trade receivable, trade payable, Loans and advances receivable/Payable shown in the books of accounts. In the absence of the same we are unable to confirm the balance and nature of the transactions.

3. We have not been provided with the rent agreements, invoices/ vouchers for expenses. We have relied only on management representation in this regard.

4. We have not been provided with the challans / acknowledgements/ returns for the payment of the TDS/G5T/PF/E5IC or any other statutory payments made by the company.

5. The Company has no fixed assets register. The existence of the fixed asset has only been confirmed by the management. We have not been able to confirm from any other method about the existence and valuation of the said fixed assets.

6. We would like to draw attention to the fact that, balance confirmation from the parties from whom amounts are due for more than one year were not available and in absence of the same we are not in position to comment on the deviation in the balances or execution of the transactions. The absence of the said balance confirmation would also affect the expected credit loss of the debtors and accordingly the same may affect the amount of the carrying amount of debtors and the profit.

7. During our review we have been informed by the management that the financial results for the year ended on 31st March 2018 have been published late as there is a financial fraud during and after IPO.

The previous auditor has not reported the same, however Directors have filed Complain against the Merchant Banker & Other in Economic Offence wing. According to the management representation the complaint has been filed for Rs 5,50,47,906 which is shown in Other Current Financial Assets which is claimed to have been fraudulently transferred by merchant banker and others.

The case is not resolved yet. However Economic Offence Wing (EOW) has considered this as a civil matter and company is planning to take further course of action in this matter.

We therefore take no responsibility of correctness of the said figure and other figures which can be affected by it.

Other Information

The companys management and board of directors are responsible for the other information. The other information comprises the Boards Report on corporate governance and Business Responsibility report but does not include the consolidated financial statements, standalone financial statement and our auditors report thereon.

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

In connection with our audit of 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 procedures or otherwise appear 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 not been provided with any such information and therefore we are not in a position to comment on the same.

Managements Responsibility for the Standalone 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 state of affairs, loss, cash flows of the Company in accordance with the accounting principles generally accepted in India, prescribed under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safe guarding 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 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.

Board of directors is also responsible for overseeing the companys financial reporting process.

Auditors Responsibility

Our objectives are to obtain reasonable assurance about whether 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 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 aggregate, they could reasonably be expected to influence the economic decision of users taken on the basis of these standalone financial statements.

As a part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risk of material misstatement of the standalone financial statements, weather due to fraud or error, design and perform audit procedure responsive to those risk, and obtain evidence that us sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud for one resulting from error, as fraud may involve collusion, forgery, intentional omission, misrepresentation, or the override of internal control.

• 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 expressing our opinion on whether the company has an adequate internal financial control 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 the 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 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.

• 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 standalone 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 the Companies (Auditors Report) Order, 2020 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

(a) As stated in disclaimer of opinion paragraph, we have not been able to obtain required information which was necessary for the purposes of our audit.

(b) As specified in the Disclaimer of Opinion paragraph, we do not express any opinion on the maintenance of Books of Accounts.

(c) As stated in the Disclaimer of Opinion para, we do not express any opinion on agreement between the Balance Sheet, the Statement of Profit and Loss, Cash Flow Statement dealt with by this Report, and the books of account.

(d) Except matters specified in basis of disclaimer para, in our opinion, the aforesaid standalone AS financial statements comply with the Accounting Standards prescribed under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) We have not received any written representation from the directors as on 31st March 2024 and therefore we are not in position to confirm whether any of the directors is disqualified as on 31st March 2024 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 with reference to financial statements 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. As specified in the disclaimer of the Opinion Para we are unable to express opinion that all the litigations are disclosed as and when required or not;

ii. As specified in the disclaimer of the Opinion Para we are unable to express opinion that the Company has any long-term contracts including derivative contracts for which there were any material foreseeable losses or not;

ill. As specified in the disclaimer of the Opinion Para we are unable to express our opinion that there were any amounts which were required to be transferred to the Investor Education and Protection Fund by the Company or not.

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 such audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and

(b) contain any material misstatement.

v. No dividend has been declared or paid during the year by the company.

vi. Based on our examination, which included test checks, the company has used accounting software for maintaining its books of account for the financial year ended March 31, 2024, which does not have a feature of recording audit trail (edit log) facility.

Annexure A to the Independent Auditors Report (Referred to in our report of even date)

With reference to the Annexure A referred to in the Independent Auditors report to the members of the Company on the standalone financial statements for the year ended 31st March 2024, we report the following:

I. In Respect of Fixed Assets

(a) The Company has maintained records showing particulars of its fixed assets and depreciation thereon till it was claimed and computed. The production activity is suspended and the company has not been claiming depreciation on the assets. Any documents showing that the company has sought permission of lenders for selling the machinery are not available on record.

(b) As explained the Company has program of physical verification of its fixed assets through which all the fixed assets are verified in a phased manner. No evidence has been provided by the company for physical verification of fixed assets, so we are not in a position to give opinion whether it is reasonable having regard to the size of the Company, the nature of its assets and material discrepancies were noticed on such verification. The company has not been claiming deprecation due to suspension of business activity.

(c) The Company does not hold the immovable property. Therefore, the provisions of Clause 3(i) (c) of the said Order are not applicable to the Company.

(d) The company has not revalued its property, plant and equipment (including the right of use assets) or intangible assets or both during the year, the clause for revaluation of Property, Plant and Equipment is not applicable.

(e) As explained to us, no proceedings have been initiated or are pending against the company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

II. In Respect of Inventories

As Company claims to be in the business of rendering services, and consequently, does not hold any inventory.

III. Compliance under section 189 of The Companies Act, 2013

Except as stated in para basis of disclaimer in our opinion and according to the information and explanation provided to us the Company has not granted any loans to companies, firms or other parties covered in the register maintained under section 189 of Companies Act, 2013.

Except as stated in para basis of disclaimer, in our opinion and according to the information and explanation provided to us the Company has not obtained any loans to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

There is no unsecured loan to the employee and others.

IV. Compliance under section 185 and 186 of The Companies Act, 2013

According to information and explanations given to us, the Company has given advances to the directors and related parties for purchase of property. Which in our opinion would be in violation of Section 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments, and providing guarantees and securities, as applicable. However, as we have not received any external evidence, we are unable to provide a basis for an audit opinion on these financial statements. Hence we do not express any opinion for the same.

V. Compliance under section 73 to 76 of The Companies Act, 2013 and Rules framed thereunder while accepting Deposits

In our opinion and according to the information and explanation provided to us the Company has not granted except for the loans from body corporate obtained in earlier years the Company has not accepted any deposits as defined in The Companies (Acceptance of Deposits) Rules 2014. Accordingly, the provisions of Clause 3(v) of the Order, section 73 to 76 of the Companies Art, 2013 and Companies (Acceptance of Deposit rules) 2014, are not applicable to the Company.

VI. Maintenance of cost records

The Company is not required to maintain cost records 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 Art, 2013.

VII. Deposit of Statutory Dues

(a) The company has not paid undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, GST, Cess and other statutory dues applicable to the Company with the appropriate authorities. As per the books of accounts, the following undisputed amounts payable in respect of the aforesaid statutory dues were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable.

Name of the Act	Amount In Rs.
TDS on Salary	2,51,489
TDS on Professional Fees	8,851
TDS payable (others)	61,785
TDS on Rent	70,540

(b) According to the information and explanation given to us by the management, there were no disputed dues in respect of income tax, GST, custom duty, excise duty, wealth tax except:

Nature of Status	Nature of dues	Forum where Dispute is Pending	Period of which the amount Relates	Demand Raised	Amount Outstanding
Income Tax Department	Income Tax Department	CPC, Bengaluru	AY 2017-18	52,010	52,010
Income Tax Department	Income Tax Department	NFAC (Appeal)	AY 2016-17	20,000	20,000
Income Tax Department	Income Tax Department	CIT (Appeal)	AY 2016-17	1,13,46,050	1,13,46,050
Income Tax Department	Income Tax Department	CPC, Bengaluru	AY 2016-17	9,250	9,250

VIII. Unrecorded income

There were no transactions relating to previously unrecorded income that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961).

IX. Repayment of Loans and Borrowings

The company has not taken any loan from financial institution, bank or debenture holders. Except on unsecured loan from HDFC bank for which there have been uncertainties in repayment.

X. Utilization of Money Raised by Public Offers and Term Loan for which they Raised

As explained to us by the management the amount raised by way of initial public offer or further public offer (including debt instruments) and has not been utilized for the purpose for which it was raised and the same has been fraudulently transferred by the merchant banker to other accounts. In the absence of any further information in this regard we are not in a position to give an opinion on the same.

XI. Reporting of Fraud During the Year

Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no fraud on the Company by the officers and employees of the Company has been noticed or reported during the year. However, a complaint has been filed with the Economic Offence wing for the fraud of the previous year.

XII. Compliance by Nidhi Company Regarding Net Owned Fund to Deposits Ratio

As per information and records available, the Company is not a Nidhi Company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

XIII. Related party compliance with Section 177 and 188 of companies Act - 2013

According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards. However, as we have not received any external evidence, we are unable to provide a basis for an audit opinion on these financial statements. Hence, we do not express any opinion for the same.

XIV. Internal Audit Systems

In our opinion, the Company has not have an adequate internal audit system commensurate with the size and the nature of its business. The Company has no statutory obligation for appointing Internal Auditor hence provision of clause (b) of paragraph 3(xiv) of the order is not applicable.

XV. Compliance under section 192 of Companies Act - 2013

According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013. However, as we have not received any external evidence, we are unable to provide a basis for an audit opinion on these financial statements. Hence we do not express any opinion for the same.

XVI. Requirement of Registration under 45-IA of Reserve Bank of India Act, 1934

According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

XVII. Cash losses

We are unable to provide a basis for an audit opinion on these financial statements. Hence we do not express any opinion for the same.

XVIII. Resignation of statutory auditors

According to the information and explanations given to us, there has not been any resignation of statutory auditors during the year.

XIX. Material Uncertainty

We are unable to provide a basis for an audit opinion on these financial statements. Hence we do not express any opinion on the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the financial statements and our knowledge of the Board of Directors and Management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report indicating 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. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.

XX. Transfer to fund specified under Schedule VII of Companies Act, 2013

The company has no obligation to spend under corporate social responsibility. So, reporting under clause (xx) of the order is not applicable for the year

Annexure B to the Auditors Report

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

We have audited the internal financial controls over financial reporting of KIDS MEDICAL SYSTEMS LIMITED ("the Company") as of March 31, 2024, in conjunction with our audit of the standalone 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 the 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 (the "Guidance Note") and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, 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 have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the 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) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial 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

Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraph of the independent audit report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on whether the Company have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2024, 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.