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Opto Circuits (India) Ltd.

BSE: 532391 Sector: Others
NSE: OPTOCIRCUI ISIN Code: INE808B01016
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OPEN 6.85
PREVIOUS CLOSE 6.92
VOLUME 34941
52-Week high 12.90
52-Week low 6.84
P/E
Mkt Cap.(Rs cr) 170
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 6.85
CLOSE 6.92
VOLUME 34941
52-Week high 12.90
52-Week low 6.84
P/E
Mkt Cap.(Rs cr) 170
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Opto Circuits (India) Ltd. (OPTOCIRCUI) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

OPTO CIRCUITS (INDIA) LTD BANGALORE

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial statements of Opto Circuits(India) Ltd ("the Company") which comprise the Balance Sheet as at 31 March2016 the Statement of Profit and Loss the Cash Flow Statement for the year then endedand a summary of the significant accounting policies and other explanatory information.

MANAGEMENT’S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

The Company’s Board of Directors is responsible for the matters stated insub-section 5 of Section 134 of the Companies Act 2013 ("the Act") with respectto the preparation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 (‘‘the Rules"). This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

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 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 ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company’s Directors as well as evaluating theoverall presentation of 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

We draw your attention: a) Regarding the trade receivables amounting to Rs.59977.61Lakhs (includes overseas dues Rs. 58531.85 Lakhs more than 6 months) TradePayables amounting to Rs.22784.22 Lakhs (includes overseas payables Rs. 3308.43Lakhs more than 36 months) there is no confirmation of balances availablesupporting the outstanding receivables and payables. Although receivables ofRs.37690.03 Lakhs and payables of Rs. 3308.43 Lakhs over 36 monthstheprovisioning/write off of such debts and write back of liabilities could notbe ascertained. b) The Company has borrowings from State Bank of India HDFC BankLtd and Bank of Nova Scotia for which no provision for interest aggregating toRs.3169.53 Lakhs is made in the financial statements as these Banks have beencategorized borrowings as NPA. c) The Company holds investment in subsidiary Opto

Cardiac Care Limited amounting to Rs. 20005.50 Lakhs and advances amounting toRs. 50943.13 Lakhs and has not been able to ascertain the impairment ofinvestments and advances in this subsidiary due to hostile takeover of itsstep down subsidiary (Cardiac Science Corporation) and the resultant pendinglitigation before the US Bankruptcy Courts.

d) The company has the following short term borrowings from the banks as on thedate of balance sheet:

Name of the bank Facility Amount (in Rs. crores)
Nova Scotia bank Working capital 119.16
HDFC bank ltd working capital 50.47
State Bank of India working capital 179.51
Standard Chartered Bank working capital 229.16
TOTAL 578.30

Banks have classified these liabilities as irregular advances. Bank Nova Scotia andHDFC Bank Ltd have issued winding up notices dated 03/06/2014 and 24/11/2014 respectivelyfor recovery of the above said outstanding dues and the bankers have filed winding uppetition in the Hon'ble High Court of Karnataka against the company. State bank of Indiahas issued notice under SARFAESI ACT on factory building and current assets of thecompany. State Bank of India has taken symbolic possession of the property at 83Electronic City Phase-1 Hosur Road Bangalore and has put up notice for auctioning ofthe property.

QUALIFIED OPINION

Subject to the above qualifications in our opinion and to the best of our informationand according to the explanations given to us the aforesaid standalone financialstatements give the information required by the Act in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at 31 March 2016 and its loss and itscash flows for the year ended on that date.

REPORT ON OTHER LEGAL REGULATORY REQUIREMENT

As required by ‘the Companies (Auditor’s Report) Order 2016’ issued bythe Central 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 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 account as required by law havebeen 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 and the Cash Flow Statementdealt with by this Report are in agreement 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 standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withRule 7 of the Companies (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.

(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.

(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 of pending litigations as at 31 March 2016 on itsfinancial position in its standalone financial statements – Refer Note No.5A(5.4)5A(5.5) 7(b) 28B and 28D.

ii. The Company is not required to make provision as at 31 March 2016 as requiredunder the applicable law or accounting standards for material foreseeable losses if anyon long-term contracts since the Company did not have any derivative contracts as at 31March 2016.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31 March2016.

For B. V. Swami & Co. Chartered Accountants

A. AMARANATH Partner

Membership Number: 213629

Firm Registration Number: 009151S

Place: Bengaluru

Date: 14th June 2016

ANNEXURE A TO INDEPENDENT AUDITORS’ REPORT

The Annexure Referred to in Independent Auditors’ Report to the members of theCompany on the standalone financial statements for the year ended 31 March 2016 we reportthat:

i. (a) The Company is maintaining proper records showing full particularsincluding quantitative details and situation of fixed assets.

(b) The fixed assets of the Company have been physically verified by theManagement during the year and no material discrepancies have been noticed on suchverification. In our opinion the frequency of verification is reasonable.

(c) The title deeds of immovable properties as disclosed in the fixed assets tothe financial statements are held in the name of the Company. ii. The physicalverification of inventory have been conducted at periodical intervals by theManagement but not effectively conducted during the year. As certified bythe management the discrepancies noticed on physical verification of inventory ascompared to book records were not material. However we recommend the Managementto conduct the physical verification of inventories on quarterly basis and maintainproper records commensurate to the nature and size of the business.

iii. (a) Subject to the qualification in the audit report and as per theexplanations given to us the Company has granted unsecured loans to the partieslisted in the register maintained under Section 189 of the Companies Act.

(b) In respect of the aforesaid the company has given loans and advances to itssubsidiaries aggregating to Rs. 51317.84 Lakhs for which no interest is collectedfrom the loans granted to its subsidiaries during the year.

(c) In respect of the aforesaid loans there is no amount which is overdue formore than ninety days.

iv. In our opinion and according to the information and explanations given tous the Company has complied with the provisions of Section 185 and 186 of the CompaniesAct 2013 in respect of the loans and investments made and guarantees and securityprovided by it.

v. In our opinion and according to the information and explanations given tous the Company has not accepted any deposits from the public.

vi. We have broadly reviewed the records maintained by the Company pursuant tothe rules prescribed by Central Government for maintenance of cost records undersub section 1 of Section 148 of the Act and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. Howeverwe have not made a detailed examination of the records.

vii. (a) According to the information and explanations given to us and therecords of the Company examined by us in our opinion the Company is generallyregular in depositing undisputed statutory dues in respect of providentfund employees` state insurance professional tax duty of customs sales taxthough there has been a slight delay in a few cases and is regular in depositingundisputed statutory dues including service tax as applicable with theappropriate authorities. According to the information and explanations given to usthere were no statutory dues payable for more than six months except incometax given in note 7 as on 31.03.2016.

(b) According to the information and explanations given to us and the records ofthe Company examined by us. The particulars of dues of income tax as at 31 March2016 which have not been deposited on account of a dispute are as follows:

Name of the statute Name of dues Amount (in Rs. crores) Period to which it relates Forum where dispute is pending
Income Tax Authority 0.07 A Y 2005-06 Paid subsequently
Income Tax Authority 0.20 A Y 2006-07 Paid subsequently
Income Tax Authority Minimum Alternative Tax 3.65 A Y 2011-12 CIT (Appeals)
Income Tax Authority Minimum Alternative Tax 1.00 A Y 2012-13 CIT (Appeals)
Income Tax Authority Minimum Alternative Tax 95.86 A Y 2013-14 CIT (Appeals)
Income Tax Authority Dividend Tax 17.57 A Y 2010-11 High Court writ appeal
Income Tax Authority Dividend Tax 18.00 A Y 2011-12 High Court writ appeal
Income Tax Authority Dividend Tax 13.80 A Y 2012-13 High Court writ appeal

viii. According to the records of the Company examined by us and the informationand explanations given to us except for short term borrowings for working capitalas below the Company has not defaulted in repayment of loans or borrowings toany financial institution or bank or Government or dues to debenture holders as atthe balance sheet date.

Name of the bank Facility Amount (` in crores)
Nova Scotia bank Working capital 119.16
HDFC bank ltd Working capital 50.47
State Bank of India Working capital 179.51
Standard Chartered Bank Working capital 229.16
Total 578.30

ix. The Company has not raised any moneys by way of initial public offerfurther public offer (including debt instruments) and term loans during the yearunder review. Accordingly the provisions of Clause 3(ix) of the Order arenot applicable to the Company.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in Indiaand according to the information and explanations given to us we have neithercome across any instance of material fraud by the Company or on the Company by itsofficers or employees noticed or reported during the year nor have we beeninformed of any such case by the Management.

xi. The Company has paid/ provided for managerial remuneration in accordancewith the requisite approvals mandated by the provisions of Section 197 read withSchedule V to the Act.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are notapplicable to it the provisions of Clause 3(xii) of the Order are not applicableto the Company.

xiii. The Company has entered into transactions with related parties incompliance with the provisions of Sections 177 and 188 of the Act. The details ofsuch related party transactions have been disclosed in the financial statementsas required under Accounting Standard (AS) 18 Related Party Disclosures specifiedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules2014.

xiv. The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.Accordingly the provisions of Clause 3(xiv) of the Order are not applicableto the Company.

xv. The Company has not entered into any non-cash transactions with itsdirectors or persons connected with him. Accordingly the provisions of Clause3(xv) of the Order are not applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of theReserve Bank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Orderare not applicable to the Company.

FOR B. V. SWAMI & CO.

Chartered Accountants

A. AMARANATH Partner

Membership Number: 213629

Firm Registration Number: 009151S

Place: Bengaluru

Date: 14th June 2016

ANNEXURE B TO THE INDEPENDENT AUDITOR’S REPORT - 31ST MARCH 2016

(Referred to in our report of even date)

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION143 OF THE ACT

We have audited the internal financial controls over financial reporting of OptoCircuits (India) Ltd ("the Company") as of 31 March 2016 in conjunction withour audit of the standalone 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").

AUDITORS’ RESPONSIBILITY

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 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 theadequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal controls based on the assessed risk.The procedures selected depend on the auditor’s judgment including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the Company’s internal financial controlsystem over financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company’s internal financial controls over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal financial controlsover financial 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 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 controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

OPINION

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 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 ICAI.

FOR B. V. SWAMI & CO.

Chartered Accountants

A. AMARANATH Partner

Membership Number: 213629

Firm Registration Number: 009151S

Place: Bengaluru

Date: 14th June 2016