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Spacenet Enterprises India Ltd.

BSE: 513249 Sector: IT
NSE: SPCENET ISIN Code: INE970N01027
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Spacenet Enterprises India Ltd. (SPCENET) - Auditors Report

Company auditors report

To the Members of Spacenet Enterprises India Limited (formerly Northgate Com TechLimited)

Report on the Standalone Financial Statements

We have audited the accompanying Standalone financial statements of SpacenetEnterprises India Limited (formerly Northgate Com Tech Limited) (‘theCompany’) which comprise the Balance Sheet as at 31 March 2016 the Statement ofProfit and Loss the Cash Flow Statement for the year then ended and a summary ofsignificant 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 in Section134(5) of the Companies Act 2013 (‘the Act’) with respect to the preparation ofthese Standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement 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 thereunder.

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 theauditor’s 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 wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe Standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2016 and its loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act we give in the ‘Annexure A’ a statement on the mattersspecified in paragraphs 3 and 4 of the said 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 purpose 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 Standalone financial statements comply with theAccounting 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 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’; 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:

(i) The Company has disclosed the impact of pending litigations as at 31 March 2016 onits financial position in its financial statements

(ii) The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long term contracts to the financialstatements. The Company did not have any derivative contracts.

(iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For Navitha And Associates
Chartered Accountants
ICAI Firm Registration Number: 012026S
Navitha.K
Place: Hyderabad Proprietor
Date : 30 May 2016 Membership Number: 221085

Annexure A to the Auditors’ Report

With reference to Annexure A referred to in the Independent Auditor’s Report ofeven date to the members of Spacenet Enterprises India Limited (formerly NorthgateCom Tech Limited) (‘the Company’) on the Standalone financial statements for theyear ended 31 March 2016 we report that:

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 the fixed assets are verified every year. In our opinion the periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its assets. In accordance with this program certain fixed assets were verifiedduring the year. As explained to us the Management is in the process of reconciling thephysically verified fixed assets with the book records. The Management believes that thediscrepancies if any are not likely to be material.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there was no immoveable properties on the nameof the company

ii. The Company is a service company primarily rendering IT and ITES services to itswholly owned subsidiary Globe7 Pte Limited Singapore. Accordingly it does not hold anyphysical inventories.

iii. The Company has not granted any loans secured or unsecured to companies firms orother parties covered in the register maintained under Section 189 of the Companies Act2013.

iv. In our opinion and according to the information and explanations given to us theCompany has not granted any loans or made any investments or provided any guarantees orsecurity to the parties covered under Section 185 and 186 of the Act. Thus paragraph3(iv) of the said Order is not applicable to the Company.

v. The Company has not accepted any deposits from the public.

vi. The Central Government of India has not prescribed the maintenance of cost recordsunder section 148(1) of the Act for any of the services rendered by the Company.

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 Employees stateinsurance Income-tax Sales tax Service tax Value added tax Duty of excise Cess andother material statutory dues have generally been regularly deposited during the year bythe Company with the appropriate authorities though there has been slight delay in fewcases. As informed to us the Company does not have any dues on account of Duty ofCustoms.

According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there are no dues in respect of Provident fundEmployees state insurance Income-tax Sales tax Service tax Value added tax Cess andother material statutory dues were in arrears as at 31 March 2016 for a period of morethan six months except the TDS of Rs 391538 from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofSales tax which have not been deposited with the appropriate authorities on account of anydispute. However the following dues of Income-tax Service tax Value added tax and Dutyof excise have not been deposited by the Company except as stated hereunder:-

S.No. Name of the Statute Nature of dues Amount Period to the amount relates Forum where dispute is pending
(Rs)
1. Income Tax Tax Demand 2971230 AY 2012-13 CIT Appeals
2. Income Tax Tax Demand 909580 AY 2013-14 CIT Appeals

viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of loans or borrowings to banks or to any financialinstitution as at the balance sheet date. Further the Company does not have anyoutstanding loan or borrowings from government nor has it issued any debenture as at thebalance sheet date.

ix. The Company has not raised any monies by way of initial public offer or furtherpublic offer

(including debt instrument). According to the information and explanations given to usthe Company has applied the term loans for the purpose for which they were obtained.

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 India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

xi. The company has not paid any managerial remuneration during the year under reviewand hence provisions of Sec 197 read with Schedule V to the Companies Act does not apply.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Thus paragraph 3(xii) of the said Order is not applicableto 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 Sections 177 and 188 of the Act. The details of such transactions havebeen disclosed in the financial statements as required under ‘Accounting Standard(AS) 18 Related Party Disclosures’ specified under Section 133 of the Companies Act2013 read with Rule 7 of the Companies (Accounts) Rules 2014.

xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Thus paragraph 3(xiv) of the said Order is not applicable to the Company.

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. Thus paragraph 3(xv) of thesaid Order is not applicable to the Company.

xvi. In our opinion and according to the information and explanation given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Thus paragraph 3(xvi) of the said Order is not applicable to Company.

For Navitha And Associates
Chartered Accountants
ICAI Firm Registration Number: 012026S
Place: Hyderabad Navitha.K
Date : 30th May 2016 Proprietor
Membership Number: 221085

Annexure B to the Auditors’ Report

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 SpacenetEnterprises India Limited (formerly Northgate Com Tech Limited) (‘theCompany’) as of 31 March 2016 in conjunction with our audit of the Standalonefinancial statements of the Company for the year ended on that date.

Management’s 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’). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company’s 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.

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 the ICAI anddeemed to be prescribed under Section 143(10) of the Act to the extent applicable to anaudit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the ICAI. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about 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 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 procedures selected depend on the auditor’s judgment including the assessmentof the 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 appropriate toprovide a basis for our audit opinion on the Company’s 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and

3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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.

Opinion

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 control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the ICAI.

For Navitha And Associates
Chartered Accountants
ICAI Firm Registration Number: 012026S
Navitha.K
Place: Hyderabad Proprietor
Date : 30 May 2016 Membership Number: 221085