To the Members of Amber Enterprises India Limited
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
1. We have audited the accompanying standalone financial statements of AmberEnterprises India Limited ('the Company') which comprise the Balance Sheet as at 31 March2019 the Statement of Profit and Loss (including Other Comprehensive Income) the CashFlow Statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information.
2. I n 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 Companies Act 2013 ('Act') in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India including IndianAccounting Standards ('Ind AS') specified under section 133 of the Act of the state ofaffairs (financial position) of the Company as at 31 March 2019 and its profit (financialperformance including other comprehensive income) its cash flows and the changes inequity for the year ended on that date.
BASIS OF OPINION
3. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India ('ICAI') togetherwith the ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.
KEY AUDIT MATTERS
4. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
5. We have determined the matters described below to be the key audit matters to becommunicated in our report:
|Key audit matter ||How our audit addressed the key audit matter |
|Impairment assessment of investments in subsidiary companies ||Our audit procedures included but were not limited to the following: |
|As described in Note 9 to the standalone financial statements as at 31 March 2019 the Company has investments aggregating INR 5230.32 Lakh in its wholly owned subsidiary companies PICL India Private Limited ("PICL") and Appserve Appliance Private Limited ("Appserve"). The subsidiaries have been incurring losses resulting in possible impairment indicators. ||a) We obtained an understanding of the management process for identification of possible impairment indicators and process performed by the management for impairment tests performed. |
| ||b) We understood evaluated and tested controls around management's assessment of the impairment indicators and the impairment tests performed. |
|In view of the above the management of the Company during the year ended 31 March 2019 has carried out an impairment test for such investments whereby the carrying amount of investments were compared with their fair values for which the management has prepared detailed cash flow projections based on business plans of the subsidiary companies expected growth rates in the business and other market related factors including the discount rates etc. ||c) We reconciled the cash flow projections to the business plans approved by the Company's board of directors; |
| ||d) We discussed management's underlying assumptions used for the cash flow projections including the expected growth rates and considered evidence available to support these assumptions in light of our understanding of the business; |
|While the above impairment test resulted in no impairment required to be recognized in the carrying value of investment in PICL an impairment provision to the extent of the net carrying value of the investment in Appserve aggregating INR 170 Lakh has been recognised as at 31 March 2019. ||e) We assessed the reasonableness of the assumptions used and appropriateness of the valuation methodology applied. We tested the discount rates and long-term growth rates used in the forecast visa-vis industry forecasts where deemed appropriate; |
|Considering the materiality of the amounts involved significant degree of judgement and subjectivity involved in the estimates and key assumptions used in determining the cash flows used in the impairment evaluation we have determined impairment of such non-current investments as a key audit matter. ||f) We involved valuation experts to assess the appropriateness of the valuation model used by the management and the assumptions used relating to discount rates risk premium industry growth rates etc. to assess their reasonability; |
| ||g) We evaluated the sensitivity analysis performed by management in respect of the key assumptions such as discount and growth rates to assess the estimation uncertainty impact of such assumptions on the calculations; |
| ||h) We assessed the appropriateness and adequacy of the disclosures made by the management for the impairment losses recognized in accordance with applicable accounting standards. |
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|Key audit matter ||How our audit addressed the key audit matter |
|Product Development - Intangible assets ||Our audit work included but was not restricted to performing the following procedures: |
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|As disclosed in note 7 (iii) and note 8 (iii) to the standalone financial statements the Company develops various product models and performs trial runs for enhancing the performance and increasing the efficiency of the products. The Company has a research and development department which oversees such development process and conducts trial runs. The Company has capitalised INR 2056.89 lakh during the year ended 31 March 2019 under product development and Intangible assets under development which comprises of raw material cost (net of scrap sales) and certain attributable overheads. The Company capitalises the product models when they are ready for sale in the active market. ||a) We obtained an understanding of management's process for assessing costs forming part of research and development activities and whether such costs meet recognition criteria in terms with Indian Accounting Standard 38 Intangible Assets; |
| ||b) We assessed the design and implementation of controls in respect of expenses incurred for trial runs in addition to testing the effectiveness of key controls operating across the business. |
|Such developmental activities represent a significant part of the business and the Company uses judgement to determine classification of expenditure into research and development phase wherein as per the applicable accounting guidance expenditure incurred on research activities is required to be recognised in the statement of profit and loss and development costs may be capitalised subject to specific conditions. Such assessment includes assessing whether the product being developed is commercially feasible whether the Company has adequate technical financial and other required resources to complete the development and whether the costs will be fully recovered through future sale of the product. Considering the materiality of the amounts significant judgement involved in determining the appropriate quantum of development expenses to be capitalised including those incurred on trial runs this matter has been considered as a key audit matter for the current year audit. ||c) We obtained a schedule of all the costs capitalized by the Company and on test-check basis verified that the cost of only those raw materials that have been used for the purpose of development activities and trial runs were capitalized as applicable. |
| ||d) We also assessed the reasonableness of overheads allocated along with consumption of raw material. |
| ||e) We further evaluated the commercial viability of the product by considering other information obtained during the audit including products being developed in previous years the stage of related sales prospects and where appropriate the level of sales generated to determine whether the status and performance of developed products corroborated management's assertions over the technical feasibility and the ability to generate 'probable' future economic benefits. |
| ||f) We also confirmed if the carrying value of these intangibles under development will be recovered by the Company and there are no impairment indicators for these assets. For this assessment we obtained the product details which are being currently developed by the Company and discussed the same with the management including research and development personnel. We also reviewed the product assessment in reference to developed products which were capitalized in the earlier years and being currently sold by the Company. |
| ||g) We have evaluated the adequacy of disclosures made by the Company in the financial statements in view of the requirements as specified in the Indian Accounting Standards. |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
6. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor's report thereon. The Annual Report is expectedto be made available to us after the date of this auditor's report.
Our opinion on the standalone financial statements does not cover the other informationand we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
When we read the Annual Report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONEFINANCIAL STATEMENTS
7. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the state of affairs (financial position) profit orloss (financial performance including other comprehensive income) changes in equity andcash flows of the Company in accordance with the accounting principles generally acceptedin India including the Ind AS specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
8. In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
9. Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
10. Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith Standards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone financial statements.
11. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for explaining our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
12. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
14. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalone financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
15. As required by section 197(16) of the Act we report that the Company has paidremuneration to its directors during the year in accordance with the provisions of andlimits laid down under section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in terms of section 143(11) of the Act we give in theAnnexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.
17. Further to our comments in Annexure I as required by section 143(3) of the Act wereport 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 standalone financial statements dealt with by this report are in agreement withthe books of account;
d) in our opinion the aforesaid standalone financial statements comply with Ind ASspecified under section 133 of the Act;
e) on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2019 from being appointed as a director in terms of section 164(2) of the Act;
f) we have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as on 31 March 2019 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 24 May 2019 as per Annexure II expressed unmodified opinion; 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 (as amended) inour opinion and to the best of our information and according to the explanations given tous:
i. the Company as detailed in note 43 to the standalone financial statements hasdisclosed the impact of pending litigations on its financial position as at 31 March 2019;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as at 31 March 2019;
iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended 31 March 2019; and
iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these standalone financial statements. Hence reporting under thisclause is not applicable.
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| ||For Walker Chandiok & Co LLP |
| ||Chartered Accountants |
| ||Firm's Registration No.: 001076N/N500013 |
| ||Sumit mahajan |
|Place: Gurugram ||Partner |
|Date: 24 May 2019 ||Membership No. 504822 |