To
The Members
MosChip Technoloties Limited
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of MosChip Technologies Limited (‘the Company), which comprise the Balance Sheet as at 31 March, 2023, 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 forming part of standalone financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as ‘the standalone financial statements).
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 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 31 March, 2023 and its profit, total comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for opinion
We conducted our audit of the standalone financial statements 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 made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
Key audit matters
Key audit matters (‘KAM) are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
Key Audit Matters
Key Audit Matter | Auditors Response |
1. Revenue Recognition | |
Revenue of the company is mainly from information Technology services comprising software development, consulting, and related services. Revenue from these contracts are recognised over a period of time in accordance with the requirements of Ind AS 115, Revenue from contracts with customers. | Our audit procedures included specific evaluation of compliance with requirements of Ind AS 115, "Revenue from Contracts with Customers" including: |
Due to nature of contracts, revenue recognition involves usage of percentage of completion method, which is determined by survey of work performed, which involves significant judgements, identification of contractual obligations and the companys right to receive payments for performance completed till date, change in scope and the consequential revised price contract price and recognition of the liability for loss making contract/onerous obligations. | Obtaining an understanding of the companys process and controls for revenue recognition process. of controls around such process and Evaluation key tested those controls for the operating effectiveness. |
Accordingly, revenue recognition involves aforesaid significant judgement and estimation. Hence, we determine this to be a key audit matter. | We also carried out a combination of procedures involving enquiry and observation, and inspection of evidence in respect of operation of these controls. |
Refer note 2.11 to the Standalone Financial Statements. | Performed test of details, on a sample basis including: |
z Obtaining and reading contract documents, including master service agreements, and other documents that were part of the agreement. | |
z Analysed and identified the distinct performance obligations in the contracts. | |
z Compared the performance obligations with those identified and recorded by the Company. | |
z Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used for recording revenue. | |
z Performed analytical audit procedures for appropriateness of revenue disclosed by type. | |
z Assessed the disclosures made in the financial statements as per Ind AS 115. |
r2. Goodwill on business acquisition: | |
As detailed in the Note 41 to the Standalone Financial Statements the company carries a Goodwill of Rs. 5,215.16 lakhs as at 31 March, 2023. | We carried out the following audit procedures: |
This Goodwill was recognised on acquisitions over a period, in terms of Ind AS 103 Business Combinations.The Carrying values of the Goodwill are based on the present value of future cash inflows and there exists a risk of impairment if cash flows are not in line with projections. | z Evaluated the design and tested the operating effectiveness of the Companys controls in assessing the recoverable value of goodwill. |
As per Ind AS 36, ‘Impairment of Assets, the goodwill acquired in business combination shall be tested annually for impairment. For the purpose of impairment testing, goodwill acquired in a business combination shall, from the acquisition date, be allocated to each of the acquirers cash-generating units (CGU) or groups of cash-generating units, | z Assessed the Companys methodology applied in determining the CGUs to which these assets are allocated. |
that is expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groups of units. Valuation of goodwill subject to management assessment of recoverable amount being higher of (i) fair value less costs to sell and (ii) value in use, involving significant judgement and are based on number of variables and estimates including projection of future sales, operating costs and profit margins; appropriate discount rate and terminal value growth rate; and probability of success in applying discounted cashflow valuation methodology. | z Tested the estimated recoverable value of these assets and assessed the methodologies used by management in deriving the recoverable value and tested the significant assumptions and the underlying data used by the Company in its analysis. |
The assessment of impairment involves significant degree of management judgements and estimates. | z Compared the significant assumptions to current industry, market and economic trends, relate Companys historical data. |
The management has concluded that the recoverable amount of CGU is higher than its carrying amount and accordingly, no impairment provisions has been recorded as at 31 March 2023. Considering the materiality of the amount involved in the estimates and assumptions used in determining the cash flows used in the impairment evaluation. Accordingly we determined impairment of such goodwill arising from business combination as Key Audit Matter for the current year audit. | z Performed sensitivity analysis of the significant assumptions to evaluate the potential change in the recoverable values of these assets resulting from hypothetical changes in underlying assumptions. |
z Assessed and validated the adequacy and appropriateness of the disclosures made by the management in the Standalone Financial Statements. |
Information Other than the Standalone Financial Statements and Auditors Report Thereon
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 Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Business Responsibility and sustainable Report, Corporate Governance and Shareholders information, but does not include the consolidated financial statements and 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 during the course of our 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.
Responsibility of Management and those charged with Governance for the Standalone Financial Statement
The Companys management and Board of Directors are 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, including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Indian Accounting Standard(‘Ind AS) and other accounting principle generally accepted in India, including Ind AS 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 the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management and 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 of the company are responsible for overseeing the Companys financial reporting process.
Auditors Responsibility for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also :
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
In our opinion and to the best of our information and according to the explanation given to us, the remuneration paid by the company to its directors during the year is with in the limits prescribed as per the provisions of section 197 of the Act.
financial statements. Refer note.32 to the Standalone Financial Statements.
For ST Mohite & Co
Chartered Accountants ICAI Firm Registration Number: 011410S
Place: Hyderabad Date: 24 May 2023
Sreenivasa Rao T Mohite
Partner
Membership No.:015635 ICAI UDIN: 23015635BGYJKT2496
Annexure A to the Independent Auditors Report
(Referred to in paragraph 2 (f) under ‘Report on Other Legal and Regulatory Requirements section of our report of even date)
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 with reference to standalone financial statements of MosChip Technologies Limited ("the Company") as of 31 March 2023 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 with reference to financial statements 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 ("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 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 Act.
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and 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 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 with reference to financial statements 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 with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls over to 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 judgement, including the assessment of the risks of material misstatement of the standalone 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 Companys internal financial controls system over financial reporting.
Meaning of Internal Financial Controls with reference to Financial Statements
A companys internal financial control with reference to financial statements 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 with reference to financial statements 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 of Internal Financial Controls with reference to Financial Statements
Because of the inherent limitations of internal financial controls with reference to financial statements, 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 with reference to financial statements to future periods are subject to the risk that the internal financial control with reference to financial statements 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, to the best of our information and according to the explanations given to us, the Company has, 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, 2023, based on the criteria for internal financial control over financial reporting 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 ICAI.
For ST Mohite & Co
Chartered Accountants ICAI Firm Registration Number: 011410S
Place: Hyderabad Date: 24 May 2023
Sreenivasa Rao T Mohite
Partner
Membership No.:015635 ICAI UDIN: 23015635BGYJKT2496
Annexure ‘B to the Independent Auditors Report
(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements section of our report to the Members of MosChip Technologies Limited of even date)
To the best of our information and according to the explanations provided to us by the Company and the books of account and records examined by us in the normal course of audit, we state that:
(B) The Company has maintained proper records showing full particulars of intangible assets.
(b) According to the information and explanation given to us and on the basis of our examination of the records of the Company, the Company has not been sanctioned working capital limits in excess of Rs. 5 crores, in aggregate, at any points of time during the year, from banks or financial institutions.The Company availed only Overdraft facility on the basis of security of partly third-party collateral of fixed deposits and not of other current assets of the company and without obligation to submit quarterly returns or statements. Accordingly reporting under clause 3(ii)(b) of the Order is not applicable.
Also refer Note 2 0 to standalone financial statements.
Particulars |
Loans Rs. in Lakhs |
Aggregate amount granted during the year. | |
-Subsidiaries | 570.68 |
-Others | - |
Balance outstanding as at balance sheet date in respect of above cases: | |
-Subsidiaries | 247.38 |
-Others | - |
The Company has not provided any corporate guarantee or offered security during the year.
The above amounts are included in note13 and 33 to the standalone financial statements.
Particulars | All Parties Rs. |
Promoters Rs. |
Related Parties Rs. |
Repayable on demand | - | - | - |
No items or repayments terms are specified | - | - | 147.53 |
Total | - | - | 147.53 |
Percentage of the total loans granted | 100% |
The above loan is included in note13 and 33 to the standalone financial statements.
There were no undisputed amounts payable in respect 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 and other material statutory dues in arrears as at March 31, 2023 for a period of more than six months from the date they became payable.
Nature of Statue | Nature of dues | Forum where the dispute is pending | Period to which the amount relates | Amount (Rs. in lakhs) |
The Income Tax Act, 1961 | Income Tax | Commissioner of Income-tax (Appeals) | AY 2019-20 | 1,057.93 |
(b) During the year, the Company has made preferential allotment 49,14,004 equity shares (fully paid) and also 16,08,590 equity shares to employees as part of ESOP scheme, and the company has complied with requirements of section 42 and 62 of the Companies Act, 2013 and the funds have been used for the purpose for which they were raised.
STANDALONE
INDEPENDENT
AUDITORS REPORT
xiv (a) In our opinion and according to the information given to us, the Company has an adequate internal audit system commensurate with the size and the nature of its business.
(b) We have considered the internal audit report for the year under audit, issued to the Company during the year and till date, in determining the nature, timing and extent of our audit procedure.
xvii The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding the financials year.
xviii. There has been no resignation of the statutory auditors of the Company during the year. Accordingly reporting under clause 3(xviii) is not applicable to the Company.
xix 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
AUDITORS REPORT
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.
For ST Mohite & Co
Chartered Accountants ICAI Firm Registration Number: 011410S
Place: Hyderabad Date: 24 May 2023
Sreenivasa Rao T Mohite
Partner
Membership No.:015635 ICAI UDIN: 23015635BGYJKT2496
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www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Copyright © IIFL Securities Ltd. All rights Reserved.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.