To the Members of
ALLIED DIGITAL SERVICES LTD
Report on the Financial Statements
We have audited the accompanying standalone Ind AS financial statements of ALLIEDDIGITAL SERVICES LTD ("the Company") which comprise the Balance Sheet as at 31stMarch 2017 and the Statement of Profit and Loss (including Other Comprehensive Income)the Cash Flow Statement and the Statement of Changes in Equity for the year then endedand a summary of the significant accounting policies and other explanatory information.
Management Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position profit or loss financial performance including other comprehensiveincome cash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards (Ind AS)prescribed under section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
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 thereunder.
We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thestate of affairs of the Company as at 31st March 2017 and its profit othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Emphasis of Matters
Without qualifying our opinion we invite attention to the following matters:
1. Balances relating to Trade Receivables and Loans and Advances are pending forconfirmations from the respective parties. Adjustments if any will be made in the year inwhich the confirmations are received.
2. In respect of Investment in subsidiaries the Company has not made any provisionsfor diminution in the value of Investments inspite of there being negative net worth inview of future business plan of said subsidiary company.
3. Intellectual Property rights (IPRs) Rs. 37.69 Crores which have been capitalizedduring the year being technical in nature we have relied on the estimates andassumptions made by the management in determining the amount capitalized.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ('the order')issued byCentral Government of India in terms of sub-section (11) of section 143 of the Act wegive in the "Annexure A" a statement on the matters specified in theparagraph 3 and 4 of the order.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany 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 Cash Flow Statement and Statement of Changes in Equity dealt with by thisreport are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31stMarch 2017 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" and
(g) With respect to the other matters to be included in the Auditor's 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:
a. the Company has disclosed the impact of pending litigations on its financialposition in its financial statements- Refer Note 28 to the financial statements;
b. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
c. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company as on 31.03.2017
d. The Company has provided requisite disclosures in the standalone financialstatements (Refer Note No. 30) as regards its holding and dealings in Specified Bank Notesas defined in the Notification S.O. 3407(E) dated November 8 2016 of the Ministry ofFinance during the period from November 8 2016 to December 30 2016. Based on auditprocedures performed and the representations provided to us by the Management we reportthat the disclosures are in accordance with the books of account maintained by theCompany.
For SHAH & TAPARIA
Chartered Accountants FRN: 109463W
Membership No. : 103840
Date: May 26 2017
"Annexure A" to Independent Auditors Report
Referred to in paragraph 1 under the heading "Report on Other Legal and regulatoryRequirements" of our Report of even date to the financial statements of the companyfor the year ended March 312017
(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of
(b) The company has a regular programme of physical verification of its fixed assets bywhich fixed assets were physically verified during the year by management. According tothe information and explanations given to us no material discrepancies were noticed onsuch verification;
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the company.
(ii) The inventory have been physically verified during the year by the management. Inour opinion the frequency of verification is reasonable. As per the information anexplanation given to us no material discrepancies were noticed on physical verification.
(iii) The company has granted interest free unsecured loan to one party covered in theregister maintained under section 189 of the Companies Act:
a) The terms and conditions of the grant of such loans are not prejudicial to theCompany's interest.
b) The terms of arrangements do not stipulate any repayment schedule and these arerepayable on demand. Accordingly reporting requirements of clause 3(iii) (b) and (c) ofthe Order are not applicable to the Company.
(iv) In our opinion and according to information and explanation given to us theprovisions of Sections 185 and 186 of the Act are not applicable to the company.
(v) The company has not accepted any deposits from the public during the FY 2016-17.However in respect of existing deposits the Company has defaulted in repayment ofPrincipal and Interest due thereon as under:
|Principal amount due as on 31.03.2017 ||Interest due upto 31.03.2017 ||Total dues as at 31.03.2017 |
|Rs 432.39 lacs ||Rs 75.59 lacs ||Rs 507.98 lacs |
(vi) As informed to us the maintenance of Cost Records has not been prescribed by theCentral Government under subsection (1) of section 148 of the Act in respect of any ofthe activities carried out by the company.
(vii) According to the information and explanations given to us in respect ofstatutory dues
(a) The Company has not generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees State Insurance Sales Tax and Value Added TaxService Tax and other material statutory dues applicable to it with the appropriateauthorities.
There were undisputed amounts payable in respect of Provident Fund Employees StateInsurance Sales Tax and Value Added Tax Service Tax Cess and other material statutorydues in arrears as at 31st March 2017 for a period of more than six months from the datethey became payable. Details are as under:-
|Particulars ||Period ||Amount (Rs. In Lacs) |
|Provident Fund ||2013-14 ||2.72 |
|Provident Fund ||2014-15 ||52.16 |
|Provident Fund ||2015-16 ||58.58 |
|Provident Fund ||2016-17 ||82.00 |
|ESIC ||2014-15 ||15.97 |
|ESIC ||2015-16 ||9.80 |
|ESIC ||2016-17 ||10.02 |
|Profession Tax ||2013-14 ||0.57 |
|Profession Tax ||2014-15 ||0.42 |
|Profession Tax ||2015-16 ||5.64 |
|Profession Tax ||2016-17 ||7.36 |
|Service Tax ||2015-16 ||183.88 |
|Service Tax ||2016-17 ||104.42 |
(c) Details of dues of Sales Tax and Value Added Tax Service Tax and Income Tax whichhave not been deposited as at March 31 2017 on account of disputes are given as below:
|Name of the Statute ||Nature of Dues ||Amount (Rs. In lacs)* ||Period to which the amount relates ||Forum where dispute is pending |
|1 ||Income Tax Act 1961 ||Income Tax ||153.56 ||AY 2006-07 2008-09 2011-12 2012-13 ||Income Tax Appellate Tribunal |
|4 ||MVAT Act 2002 ||Value Added Tax Penalty Interest ||271.38 ||FY 2012-13 2014-15 2015-16 2016-17 ||Additional |
| ||Total || ||424.94 || || |
*net of amounts paid under protest.
(viii) In our opinion and according to the information and explanations given to usthe company has defaulted in repayment of dues to bank for the FY 2016-17. The amount ofdefault in repayment of principal sum is Rs 2.91 crores and the estimated amount ofdefault in payment of interest is Rs 5.40 crores. The Company has not taken any loan fromfinancial institution or the government and has not issued any debentures during the year.
(ix) Based upon the audit procedures performed and the information and explanationsgiven by the management the company did not raise any money by way of initial publicoffer or further public offer including debt instruments. The term loans outstanding atthe beginning of the current year and those raised during the current year have beenapplied for the purposes for which those were raised.
(x) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
(xi) According to information and explanations given to us and based on our examinationof the records of the company the company has paid/provided for the managerialremuneration as provided under section 197 (read with Schedule V) of the Act.
(xii) In our opinion and according to the information and explanations give to us theCompany is not a Nidhi Company. Therefore the provisions of clause 4 (xii) of the Orderare not applicable to the Company.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with section 177 and 188 of Companies Act 2013 and the details of suchtransactions have been disclosed in the Financial Statements as required by the applicableaccounting standards.
(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company has not made preferential allotment or privateplacement of fully or partly convertible debentures during the year.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the company has not entered into any non-cashtransactions with directors or persons connected with him. Accordingly the provisions ofclause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.
(xvi) In our opinion the company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934 and accordingly the provisions of Clause 3(xvi) ofthe Order are not applicable to the Company and hence not commented upon.
For SHAH & TAPARIA
Membership No. : 103840
Date: May 26 2017
"Annexure B" to the Independent Auditors Report of even date on theStandalone Financial Statements of Allied Digital Services Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of AlliedDigital Services Limited ("the Company") as of March 31 2017 in conjunctionwith our audit of the standalone Ind AS financial statements of the Company for the yearended on that date.
Managements Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
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 accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10)of the Companies Act 2013 to the extent applicableto an audit of internal financial controls both applicable to an audit of InternalFinancial 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 andplan and 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 control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial 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 controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone Ind AS financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2)provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's 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 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 controlover 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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2017 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
Emphasis of Matter
Without qualifying our report we invite attention to the following matters;
a. There are some inherent bugs in the accounting software which is being used by thecompany. These relate to errors in processing of data which sometimes results in providingwrong information non- generation of audit trail including lack of availability ofappropriate audit evidence. The management is of the opinion that these errors are notmaterial and it may not have a material impact on the financial statements presented.
Our opinion is not modified in respect of these matters.
For SHAH & TAPARIA
Chartered Accountants FRN: 109463W
Membership No. : 103840
Place: Mumbai Date: May 26 2017