The Members of
Advanced Micronics Devices Ltd Bangalore
REPORT ON THE IND AS FINANCIAL STATEMENTS
We have audited the accompanying Ind As financial statements of Advanced MicronicsDevices Ltd ("the Company") which comprise the Balance Sheet as at 31 March2017 the Statement of Profit and Loss (including other comprehensive income) thestatement of changes in equity and the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.
MANAGEMENT'S RESPONSIBILITY FOR THE IND AS FINANCIAL STATEMENTS
The Company's Board of Directors is responsible for the matters stated in sub-section 5of Section 134 of the Companies Act 2013 ("the Act") with respect to thepreparation of these Ind As financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income thestatement of changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standards(INDAs) specified under Section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Ind As financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these Ind As financial statements basedon our audit.
In conducting our audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors' judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion.
Basis for Qualified Opinion
1. During the course of audit we have observed that company has stock Multi ParaPatient Monitors and other equipment's were nonmoving resulted in not being soldaggregating Rs 373.98 Lakhs. Out of which stock worth Rs 136.75 Lakhs lying in the customsbonded warehouse. These non-moving stocks have shelf life. Management has not assessedrealizable value of above said nonmoving stocks.
2. Similarly we have also noticed bills receivable amounting to Rs 373.37 Lakhsrelating to foreign branch operation were not realized for more than 360 days as on March2017 . The Company has not obtained confirmation of balances of Trade Receivables as on31st March 2017.
The management has not made assessment about recoverability of these receivables andhas not made necessary provisions for bad and doubtful debts.
Had the same been accounted for the net loss for the year ended 31.03.2017 would havebeen higher by Rs.747.35 lakhs and negative Net worth of the company would have beenhigher by Rs.747.35 lakhs .
3. During the course of audit we have observed that bills payable amounting toRs.1531.80 lakhs were outstanding for more than 360 days as on 31st March 2017. Thecompany has not obtained confirmation of balances of these creditors as on 31st March2017.ln the absence of such confirmation we are unable to certify the existence of theseTrade Payables.
4. We also observed that Company has a branch at USA. This branch has not been auditedby any other independent auditors for any financial year and also the company has notproduced any records for verification to check the correctness of the entries.
These entries are certified by management where in the branch share of assets are Rs.408.87 Lakhs .Our report in so far it relates to the amount included in respect of Thebranch is based solely on financial statements certified by the branch management
In the absence of independent audit we are unable to comment on correctness ofUnaudited results of the above mentioned branch.
5. According to the information and explanation given to us and on the basis of ourExamination of books of account we observed company has defaulted in payment ofRs.326.57 Lakhs towards full and final settlement of their employees as on 31.03.2017.
6. Further we also noticed that some of the ex employees filed petition for winding upin the Court for recovery of their outstanding dues which is admitted in the Labour Courtand High court.
7. As per the information available from the income tax website an amount of Rs. 6.47Lakhs remains as unpaid demand which is not reconciled with the unaccounted payments madeby the company
8. The company has stopped its Bengaluru business operation since July 2015
9. During the year under review the company has incurred a loss of Rs. 2896.03 Lakhsand after Provisioning/write off resulted in negative net worth of Rs. 4637.48 lakhs.
An Appropriate reference to BIFR/NCLT has to be made under the sick companiesRehabilitation Scheme which was not done by the management.
All the above conditions raise substantial doubt about the company's ability tocontinue as a going concern Qualified Opinion
Subject to the above qualifications in our opinion and to the best of our informationand according to the explanation given to us:
i) The statement together with the notes thereon are presented in accordance with therequirements of the listing regulation in this regard and
ii) The annual audited results for the year ended March 312017 as set out in thestatement gives a true and fair view of the net loss (including other comprehensiveincome/loss ) and other financial information for the year ended march 31.2017 inaccordance with the accounting principles generally accepted in India.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016' issued by theCentral Government of India in terms of subsection (11) of section 143 of the Act we givein the Annexure A a statement on the matters specified in paragraphs 3 and 4 of theOrder.
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 bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion except for the indeterminate effects of the matters described inthe Basis for Qualified Opinion paragraph proper books of accounts as required by lawhave 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 comprehensiveincome the changes in equity and the Cash Flow Statement dealt with by this Report are inagreement with the books of account.
(d) In our opinion except for the indeterminate effects of the matters described inthe Basis for Qualified Opinion paragraph the aforesaid financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31March 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure B. Our report expresses an unmodified opinion on the adequacyand operating effectiveness of the company's internal financial controls over financialreporting.
(g) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company doesn't have any pending litigations which would impact financialposition.
ii The Company is not required to make provision as at 31 March 2017 as required underthe applicable law or accounting standards for material foreseeable losses if any onlong-term contracts since the Company did not have any derivative contracts as at 31 March2017.
iii. There were no amounts required to be transferred to the Investor Education andProtection Fund by the company.
iv. The company has provided requisite disclosures in the Ind AS financial statementsas regards its holding and dealings in specified bank notes as defined in the notificationS.O 3407(E) Dt: Nov 8/2016 of the ministry of finance during the period from November 82016 to December 30 2016. Based on audit procedures performed and the representationprovided to us by the management we report that the disclosures are in accordance with thebooks of accounts maintained by the company and as produced to us by the management.
For B. V. Swami & Co.
Place: Bangalore Partner
Date: 30/05/2017 Membership Number: 213629
Firm Reg Number: 009151S
ANNEXURE A TO INDEPENDENT AUDITORS' REPORT
Report on Companies (Auditor's Report) Order 2016' issued by the Central Governmentof India in terms of sub-section (11) of section 143 of the Act Advanced Micronics DevicesLtd (The company)The Annexure Referred to in Independent Auditors' Report to the membersof the Company on the financial statements for the year ended 31 March 2017 we reportthat:
i. In Respect of the company's Property plant & equipment
(a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets of the Company have been physically verified by the Managementduring the year and no material discrepancies have been noticed on such verification. Inour opinion the frequency of verification is reasonable.
(c) The title deeds of immovable properties as disclosed in the fixed assets to thefinancial statements are held in the name of the Company.
ii. The physical verification of inventory has been conducted at periodical intervalsby the Management but not effectively conducted during the year. As certified by themanagement the discrepancies noticed on physical verification of inventory as compared tobook records were not material. However we recommend the Management to conduct thephysical verification of inventories on quarterly basis and maintain proper recordscommensurate to the nature and size of the business.
iii. As per the explanations given to us the Company has not granted any unsecuredloans to the parties listed in the register maintained under Section 189 of the CompaniesAct.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of the loans and investments made and guarantees and security provided by it.
v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public.
vi. Reporting under clause 3(vi) of the order is not applicable as the company'sbusiness activities are not covered by the companies (cost records and audit) rule 2014.
vii. We have broadly reviewed the records maintained by the Company pursuant to therules prescribed by Central Government for maintenance of cost records under subsection 1of Section 148 of the Act and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not made a detailedexamination of the records.
viii. According to the information and explanations given to us and the records of theCompany examined by us company has generally not been regular in depositing undisputedstatutory dues likes ESI Provident Fund Service Tax Etc. According to the informationand explanation given to us there are no undisputed amounts payable in respect of CustomsDuty Excise Duty Income Tax except below mentioned statutory dues
|(Rs in Lakhs) |
|Service tax ||37.76 |
|Professional tax ||2.29 |
|ESI ||9.94 |
|Provident Fund ||5.08 |
|VAT ||16.58 |
|Total ||71.65 |
ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans during the year under review.Accordingly the provisions of Clause 3(ix) of the Order are not applicable to theCompany.
x. To the best of our knowledge and according to the information and explanations givento us no fraud by the company and no material fraud on the company by its officers oremployees has been noticed or reported during the year.
xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under AccountingStandard (AS) 18 Related Party Disclosures specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.
xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of Clause 3(xiv) of the Order is not applicable to the Company.
xv. The Company has not entered into any non-cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order isnot applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order is notapplicable to the Company.
For B. V. Swami & Co.
Place: Bangalore Partner
Date: 30/05/2017 Membership Number: 213629
Firm Reg Number: 009151S
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT - 31ST MARCH 2017
(Referred to in our report of even date)
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUBSECTION 3 OF SECTION143 OF THE ACT OF THE Advanced Micronics Devices Ltd.
We have audited the internal financial controls over financial reporting of AdvancedMicronics Devices Ltd ("the Company") as of 31 March 2017 in conjunction withour audit of the Ind AS financial statements of the Company for the year ended on thatdate.
MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal controls over financial reporting criteriaestablished by the Company considering the essential components of internal controlsstated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India ("ICAI").These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 ("theAct").
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit.
We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing issued by ICAI and deemed to be prescribed under section 143(10) ofthe Act to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal controls based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks 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 toprovide a basis for our audit opinion on the Company's internal financial control systemover financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A company's internal financial controls over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial controls over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary
to permit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2017 based on theinternal controls over financial reporting criteria established by the Company consideringthe essential components of internal controls stated in the Guidance Note.
For B. V. SWAMI & CO.
[ A. AMARANATH]
Place: Bangalore Partner
Date :30/05/2017 Membership Number: 213629
Firm Reg Number: 009151S