To the members of SPEL Semiconductor Limited
Report on the Audited Financial Statements
Qualified Opinion
We have audited the accompanying standalone financial statements of SPEL Semiconductor Limited ("the Company"), which comprise the Balance Sheet as at March 31, 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 ended on that date, and a summary of the 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 March 31, 2023, the profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Qualified Opinion
2018 19 186.53 Lakhs
2019 20 2,760.78 Lakhs
2020 21 1,193.36 Lakhs
2021 22 615.89 Lakhs
2022 23 (Q1 & Q2) 1,713.29 Lakhs
These amounts were classified under Sundry debtors amounting to Rs. 4,756.58 Lakhs in the balance sheet as on 31-03-22 and as Rs. 6,469.86 Lakhs in un-audited balance sheet as on 30-06-22. It is stated by the management that consequent to the change in accounting policy the goods in respect of above sales which were in the premises of the company and subject to acceptance by customers have since been reclassified as Inventory to the extent of Rs 5,499.38 Lakhs. The Company has provided for impairment of Rs. 714.92 Lakhs and disclosed Rs. 4,784.47 Lakhs as closing finished goods Inventory as at 31-03-2023. On account of this change in accounting policy and after considering the impairment of Rs. 714.92 Lakhs the loss for this year is Rs. 451.77 Lakhs. Had this change not been made the loss for the year would have been lower by Rs. 971.91 Lakhs, the Sundry debtors would have been higher
by Rs. 6,469.86 Lakhs and the Inventories would have been lower by Rs. 4,784.47 Lakhs. The inventories are not verified by us at 31-03-2023 in view of the fact that, our appointment as Statutory Auditors of the company was made only during the month of May 2023.
Hence it is qualified by us in the basis for qualification section of our report on the standalone financial results.
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). 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 independence 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.
Information Other than the Financial Statements and Auditors Report Thereon
The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Boards Report including Annexures thereto 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 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.
Managements Responsibility 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, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are 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 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.
Report on Other Legal and Regulatory Requirements
report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys
internal financial controls over financialreporting.
iv.(a) The Management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) 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 or entity, including foreign entity ("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;
the compliance with section 123 of the Companies Act, 2013.
for Venkatesh & Co., Chartered Accountants FRN: 004636S
CA Dasaraty V
Partner
M No: 026336
ICAI UDIN: 23026336BGULFZ3273
Chennai., 27th June 2023
ANNEXURE "A" TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 1(f) under Report on Other Legal and Regulatory Requirements section of our report to the Members of SPEL Semiconductor Limited of even date)
Report on the Internal Financial Controls Over Financial Reporting 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 SPEL Semiconductor Limited ("the Company") as of March 31, 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 Board of Directors of the Company 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 respective 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 ofreliable financial information, as required under the Companies Act, 2013.
Auditors Responsibility
Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company 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") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. 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 testingandevaluating thedesign and operating effectivenessofinternal control based onthe assessed risk. The procedures selecteddepend on the auditors judgement, 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 forour audit opinion on the internal financial controls system over financial reporting of the Company.
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.
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
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 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 ofIndia.
for Venkatesh & Co., Chartered Accountants FRN: 004636S
CA Dasaraty V
Partner
M No: 026336
Chennai., 27th June 2023
SPEL Semiconductor Limited
Annexure B - Pending litigations against the company
S No |
Basis of Litigation | Case ID | Date | Particulars | Amount | Status |
1 | Employee Benefits | NCLT CP(IB)\248 \ 2022 | 08- 12- 2022 |
NCLT- Chennai bench- case by petitioner (K. V. Ravindran,E.No : 845
& other 26 ex-employees) |
?15L paid on Apr 25, 2023 & another ?15L planned on or before Jul 7,
2023; Hearing posted on Jul 15, 2023 |
|
2 | Income tax dispute | ITA 104 / CHNY / 2020 | 17- 01- 2020 | Income tax demand of Rs. 378.84 for the FY 2011 12 | 3,78,84,386 | Pending with AO; Case disposed by ITAT in favour of thecompany on 05/04/2022 |
3 | Income tax dispute | ITA 105 / CHNY / 2020 | 17- 01- 2020 | Income tax demand of Rs. 152.57 for the FY 2014 15 | 1,52,57,730 | Pending with ITAT; Hearing adjourned to 06/07/2023 |
4 | Income tax dispute | 28/04 | 31- 03- 2016 | Income tax demand of Rs. 72.77 for the FY 2012 13 | 72,77,266 | CIT appeals |
5 | Income tax dispute | Income tax demand of Rs. 658.65 for the FY 1999 20 |
65,53,000 | Madras High Court |
ANNEXURE C TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 2 under Report on Other Legal and Regulatory Requirements section
of our report to the Members of SPEL Semiconductor Limited of even date)
B) In respect of Intangible Assets, there were no intangible Assets hence reporting under this clause is not applicable.
b) The Company has not availed any working capital loan during the previous year and hence the reporting under this clause is not applicable.
(? in lakhs)
# | Name of the statute | Nature of dues | Amount |
1 | Employees Provident fund Act, 1952 |
EPS payable | 5.04 |
2 | Employees Provident fund Act, 1952 |
EDLI payable | 31 |
3 | Employees Provident fund Act, 1952 |
Delayed Interest on EPF payable |
141.44 |
4 | Income Tax Act, 1961 | Income tax payable | 39.7 |
5 | Income Tax Act, 1961 (TDS) | Traces Defaults | 52.55 |
6 | Service tax | Service tax payable | 24.05 |
7 | Goods & Services tax | GST RCM payable | 136.43 |
8 | Professional tax | Professional tax payable | 12.28 |
(? in lakhs)
# | Name of the statute | Nature of dues | Amount | Period | Forum where dispute is pending |
1 | Income tax Act, 1961 | Income tax | 65.53 | AY 00 01 | Madras High Court |
2 | Income tax Act, 1961 | Income tax | 378.84 | AY 12 13 | Assessing Officer |
3 | Income tax Act, 1961 | Income tax | 72.77 | AY 13 14 | CIT Appeals |
4 | Income tax Act, 1961 | Income tax | 152.58 | AY 15 16 | Income Tax Appellate Tribunal |
(b) During the year, the Company has not made any preferential allotment or private placement of Preference shares and hence reporting under this clause is not applicable.
(b) The reports of Internal auditor for the audit period have been considered by the Statutory Auditor.
(b) In our opinion, there is no core investment company within the Group (as defined in the Core Investment Companies (Reserve Bank) Directions, 2016) and accordingly reporting under clause 3(xvi)(d) of the Order is not applicable.
for Venkatesh & Co., Chartered Accountants FRN: 004636S
CA Dasaraty V
Partner
M No: 026336
Chennai., 27th June 2023
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