To the Members of Centum Electronics Limited
Report on the financial statements
We have audited the accompanying financial statements of Centum Electronics Limited("the Company") which comprise the balance sheet as at 31March 2016 thestatement of profit and lossand the cash flow statement for the year then endedand asummary of significant accounting policies and other explanatory information.
Managements responsibility for the Financial Statements
The Companys 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgements and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder. We conducted our audit in accordancewith the 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 financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theAuditors judgement including the assessment of the risks of material misstatementof the financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to theCompanys preparation of the financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Companys Directors as wellas evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2016 and its profit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2015 ("theOrder") issued by the Government of India in terms of sub-section (11) of section 143of the Act we give in the "Annexure-A" a statement on the matters specified inthe paragraphs 3 and 4 of the Order to the extent applicable.
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 and the cash flow statementdealt with by this Report 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 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 31 March 2016 from being appointed as a Director in terms of Section164 (2) of the Act; and
(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 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 has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 24 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and iii. There were no amounts duringthe year which were required to be transferred to the Investor Education and ProtectionFund by the Company.
"Annexure-A" to the Independent Auditors Report
The Annexure referred to in the Auditors Report to the Members of CentumElectronics Limited ("the Company") for the year ended 31 March 2016. We reportthat:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its fixed assets. No material discrepancies wereobserved on such 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 inventories except materials-in-transit have been physically verified by theManagement during the year. In our opinion the frequency of verification is reasonable.No material discrepancies were observed on such verification.
(iii) The Company has not granted any loans secured or unsecured to companies firmsor other parties covered in the register maintained under Section 189 of the Companies Act2013 (the Act).
(iv) According to the information and explanations given to us the Company has notgranted loans investments guarantees and security to companies firms or other partiesunder section 185 and 186 of the Act .
(v) The Company has not accepted any deposits from the public.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules prescribed by the Central Government of India for maintenance of cost recordsunder section 148 (1) of the Companies Act 2013 and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained. However we have notmade a detailed examination of the records.
(vii)(a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund EmployeesState Insurance Income-tax Sales tax Cess Valued added taxService tax Duty ofCustoms Duty of Excise and other material statutory dues have been generally regularlydeposited during the year by the Company with the appropriate authorities. As explained tous the Company did not have any dues on account of Investor Education Protection Fund andWealth tax.
According to the information and explanations given to usno undisputed amounts payablein respect of Provident Fund Investor Education and Protection Fund Employees StateInsurance Income-tax Sales tax Service tax Duty of Customs Value added tax Duty ofExcise and other material statutory dues that were in arrears as at 31 March 2016 for aperiod of more than six months from the date they became payable.
(b) According to the information and explanations given to us there are no dues ofService tax and duty of customs which have not been deposited with the appropriateauthorities on account of any dispute.
According to the information and explanations given to us the following Income taxSales tax Value of added tax and Duty of excise dues have not been deposited by theCompany on account of disputes:
|Name of the statute ||Nature of dues ||Amount net of paid under protest (Rs) ||Period to which amount relates ||Forum where the dispute is pending |
|Income Tax Act 1961 ||Disallowance of exemptions ||30719151 ||Assessment ||Income Tax |
| || ||(5463180)* ||Year 2005-06 ||Appellate Tribunal Bangalore |
|Income Tax Act 1961 ||Disallowance of exemptions ||2665351 ||Assessment ||Income Tax |
| || ||(2360739)* ||Year 2006-07 ||Appellate Tribunal Bangalore |
|Income Tax Act 1961 ||Disallowance of exemptions ||1893642 ||Assessment Year 2008-09 ||Commissioner of Income Tax (Appeals) Bangalore |
|Central Excise Act 1944 ||Disallowance of cenvat credit availed ||9988320 ||Financial year ||CESTAT Bangalore |
| || ||(1000000)* ||2004-2005 and 2005-2006 || |
|Central Excise Act 1944 ||Disallowance of cenvat credit availed ||22257402 ||Financial year ||CESTAT Bangalore |
| || || ||2010-2011 || |
| || || ||2011-2012 || |
| || || ||2012-2013 || |
|Karnataka Value Added Tax 2005 ||Commercial tax ||548809 ||Financial year 2009-2010 ||Joint Commissioner of Commercial Taxes Bangalore |
|Karnataka Value Added Tax 2005 ||Commercial tax ||6487682 ||Financial year 2013-2014 ||Joint Commissioner of Commercial Taxes Bangalore |
* Amount in parenthesis represents the payment made under protest.
(viii) In our opinion and according to the information and explanation given to us theCompany has not defaulted in repayment of its dues to any banks during the year. TheCompany did not have any outstanding dues to any financial institution or debentureholders or Government during the year.
(ix) According to the information and explanations given to us the Company has notraised moneys by way of initial public offer or further public offer (including debtinstruments) and no term loans has been raised.
Accordingly paragraph 3(ix) of the Order is not applicable.
(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during thecourse of our audit.
(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the managerial remuneration has beenpaid/provided for in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
(xii)In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable
(xiii) According to the information and explanations given to us all the transactionswith the related parties are in compliance with Section 177 and 188 of the Act whereapplicable and the details have been disclosed in the financial Statements as required bythe applicable accounting standards.
(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares fully or partlyconvertibles debentures under section 42 of the Act 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 non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3 (xv)of the Order is not applicable
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
"ANNEXURE B" TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OF CENTUM ELECTRONICS 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 CentumElectronics Limited ("the Company") as of 31 March 2016 in conjunction with ouraudit of the standalone financialstatementsof the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys 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 statedinthe Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the designimplementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to companys policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
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 deemed tobe prescribedunder section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
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 anunderstanding 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 auditors judgment 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 Companys internal financial controlssystem over 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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control 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 inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2016 based on theinternal controls over financial reporting criteria established by the Company consideringthe essential components of internal controls stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||for BSR & Co. LLP |
| ||Chartered Accountants |
| ||Firm registration number: 101248W/W-100022 |
| ||Supreet Sachdev |
|Bangalore ||Partner |
|Date: 27 May 2016 ||Membership Number: 205385 |