To the Members of Aplab Limited
Report on the Audit of Standalone Financial Results Qualified Opinion
We have audited the accompanying Standalone Indian Accounting Standard ("IndAS") financial statements of Aplab Limited ("the Company") whichcomprise the Balance Sheet as at 31st March 2021 and the statement of Profit and Loss(including Other Comprehensive Income) the Statement of Changes in Equity and theStatement of Cash Flows for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory informationfor the year ended on that date.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters described in Basis for QualifiedOpinion section of our report the aforesaid financial statements prepared by the Companygive the information required by the Companies Act 2013 ("the Act") in themanner 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 March31 2021 and its Loss and other comprehensive income changes in equity and its cashflows for the year ended on that date.
Basis for Qualified Opinion
The Company has not computed Impairment Loss if any nor made necessary provisions asrequired under Ind AS 36 in spite of continued losses resulting in negative Net WorthRs.2608.16 lakhs over the past 6 years.The Company has also not provided for impairment ofreceivables from customers as required under Ind AS 109 based on Expected Credit Loss(ECL).The effect of these non-compliances has not been quantified by the Company.Accordingly we are unable to report the impact on the net income for the year andshareholders funds as at March 31 2021.
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
a. The Company has incurred an operating loss of Rs.
38.72 lakhs during this year. The Company has accumulated losses and its net worth hascontinued to remain negative at Rs. 2608.16 lakhs at this year end. The Company during theyear could not pay various statutory dues in time. The Unpaid Statutory Dues amounted toRs. 189.89 lakhs and separated employee Unpaid Gratuity / other dues are Rs. 846.56 lakhsat the year end.
b. This situation has resulted in Company facing difficulty to generate adequateoperational inflows to finance its activities and to continue as a going concern. Thepromoters have advanced substantial unsecured loans including unpaid interest of Rs.2882.64 lakhs to sustain operations.
Our opinion is not modified on the abovematters.
Key Audit Matters
Key Audit Matters (KAM') are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
|Key Audit Matters ||How our audit addressed the Key Audit Matters |
|Unpaid Gratuity / other dues payable to separated employees on retirement /resignation amounting to Rs. 846.56 lakhs are outstanding at the year end. No interest has been provided on these outstanding. The Company has not funded Gratuity Policy to the extent of Rs. 814.45 lakhs. ||The management has stated that due to non availability of funds the liabilities could not be paid when due. The liabilities are being paid as and when some funds are available. The company has obtained Actuarial valuation of Employee Benefits (Gratuity) as per Ind AS 19 and made necessary provision in the financial statements. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in theManagement discussion and analysisBusiness Responsibility Report Corporate Governance report and Directors' Reportincluding Annexures thereofbut does not include the standalone financial statements andour report thereon.
a) Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon. b) If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.
Responsibility of Management for Financial Statements
This Statement which is the responsibility of the Company's Management and approved bythe Board of Directors has been prepared on the basis of related annual and quarterlystandalone financial statements. The Company's Board of Directors are responsible for thepreparation of these standalone financial results that give a true and fair view of thenet profit and other comprehensive income and other financial information in accordancewith the recognition and measurement principles laid down in Indian Accounting Standards(Ind AS) prescribed under section 133 of the Companies Act 2013 read with the relevantrules issued thereunder and other accounting principles generally accepted in India. 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 judgments 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 standalone financial resultsthat give a true and fair view and are free from material misstatement whether due tofraud or error.
In preparing the standalone financial results the Board of Directors are responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so. The Board of Directors arealso responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial results 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 but not for the purposeof expressing an opinion on the effectiveness of the company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the Board of Directors.
Conclude on the appropriateness of the Board of Directors' use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial results or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial results including the disclosures and whether the financial results representthe underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
As required by Section 143(3) of the Act we report that: We have sought and obtainedall the information and explanations which to the best of our knowledge and belief werenecessary for the purposes of our audit.
(a) Subject to our remarks in the Basis for Qualified Opionion paragraph we havesought and obtained all the information and explanations which to the best of ourknowledge 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 and the Cash Flow Statement dealt with by this Report are in agreement with thebooks of account.
(d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder 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 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 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 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. TheCompany has not provided the impact of pending litigations in its financial statements.The total value of such litigations has been given in para vii(b) of the Annexure A tothis report to the financial statements; ii. The Company did not have any long-termcontracts including derivative contracts for which there were any material foreseeablelosses. iii. Rs. 0.03 lakhs are remaining to be transferred to the Investor Education andProtection Fund by the Company.
ANNEXURE - A
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT
( Annexure referred to in paragraph under Report on Other Legal and RegulatoryRequirements' section of our report of even date on the accounts of Aplab Limited forthe year ended on 31st March 2021. ) i. (a) The Company has maintained properecords showing particulars including quantitative details and situation of fixed assets.This record is reconciled with the Books of Account.
(b) Physical verification of items of the fixed assets was not fully conducted by themanagement during the year as per the program; however we are informed that no materialdiscrepancies were noticed in the completed verification. The verification results arebeing reconciled with Fixed Assets Register by the Company.
(c) The Company has immovable properties of freehold and leasehold land and buildingsand the original title deeds are given to the Banks as security against various loansobtained. The Company has copies of these title deeds and on examination of these copiesand other documents we observed that all the title deeds of the properties are held inthe name of the Company. ii. As explained to us the inventory has been physicallyverified during the year by the Management at the various locations. In our opinion thefrequency of such verification needs to be substantially improved at regional offices. Asinformed to us the discrepancies were noticed in physical verification of inventory ascompared to the book records at various locations and the Company is in the process ofreconciling the same with the books of account. iii. According to the information andexplanations given to us the Company has not granted any loans to the parties listed inthe Register maintained under Section 189 of the Companies Act 2013. Consequently therequirements of Clause (a) to (c) are not applicable.
iv. The Company has not granted any loans made investments or provided guarantees andhence reporting under clause 3 ( iv ) of the Order is not applicable.
. The Company has not accepted any Public Deposits during the year. In the past theCompany had taken public deposits however all these deposits have already matured. TheCompany is yet to repay matured Public deposits of Rs. 30.26 Lakhs including interest(figure of interest required) as on 31st March 2021 due to non receipt ofnecessary documentation from the deposit holders. vi. As informed to us the company is notrequired to maintain cost records pursuant to the Companies ( Cost Accounting Records )Rules 2011 prescribed by the Central government u/s 148 (1) of the Companies Act 2013since the company is registered under MSME Act. vii. (a) According to the records of theCompany and information and explanations given to us the Company has been generallyirregular in depositing statutory dues including Provident Fund Employees StateInsurance TDS GST and other statutory dues with the appropriate authorities during theyear as there were cases of delay throughout the year. Total outstanding of all thesestatutory dues is Rs. 189.89 lakhs on the year end date. There are undisputed statutorydues of Rs. 99.35 lakhs outstanding as of March 31 2021 for a period of more than sixmonths since they became payable. The Company has not transferred necessary amount toInvestor Education and Protection Fund as on Balance Sheet date. Ramesh to confirm what isthis and amount thereof?
(b) As at the year-end according to the records of the Company and information andexplanations given to us the following are particulars of disputed amounts on account ofvarious Statutory Dues :-
|Nature of Dues ||Rs. in Lakhs ||F.Y. ||Forum where dispute is pending |
|Sales Tax ||6.11 ||2002-03 ||Dy. Commissioner Appeals New Delhi. |
|Sales Tax ||2.10 ||2003-04 ||Dy. Commissioner Appeals New Delhi. |
|Sales Tax ||2.18 ||2004-05 ||Joint Commissioner Appeals New Delhi. |
|Sales Tax ||3.48 ||2004-05 ||Joint Commissioner Appeals New Delhi. |
|Sales Tax ||0.83 ||2005-06 ||Additional Commissioner Grade II Appeal III Commercial Taxes (Lucknow) |
|Sales Tax ||1.70 ||2006-07 ||Additional Commissioner Grade II Appeal III Commercial Taxes (Lucknow) |
|Sales Tax ||1.09 ||2007-08 ||Additional Commissioner Grade II Appeal III Commercial Taxes (Lucknow) |
|Sales Tax ||3.55 ||2008-09 ||Sales Tax Tribunal Mumbai VAT |
|Sales Tax ||109.15 ||2008-09 ||Sales Tax Tribunal Mumbai VAT |
|Income Tax ||437.03 ||2010-11 ||Commissioner of IT Range 1 |
|Income Tax ||75.11 ||2011-12 ||CIT II Thane |
|Income Tax ||420.40 ||2017-18 ||CIT II Thane |
|Total ||1062.73 || || |
|Gratuity ||Many separated employees have filed cases in District Court for non payment of their Gratuity dues. Though the Gratuity amount has been provided there would be claims of Interest and other charges amount could not be determined at this stage. |
viii. The Company had taken Working Capital Loans from banks. It has not issued anydebentures. During the year Company defaulted as these loans accounts were overdrawn whencompared with the drawing power. The details of these overdrawn amounts are as under:
|Particulars ||Amt of Default as on 31st March 2021 Rs. in lakhs ||Period of Default ||Remarks |
|Union Bank of India Working Capital & WDCL Loans ||Cash Credit Rs 72.51 Lacs & WCDL Rs.181.76 lacs.(sum of over- drawn amount in various months) ||This default is observed since last 4 years and in various months. ||Default is the excess amount drawn over the Drawing Power each month. During the year in most of the months the account was overdrawn.This was mainly due to monthly interest charged to these accounts. |
ix. The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause 3(ix) ofthe Order is not applicable.
x. To the best of our knowledge and according to the information and explanations givento us no fraud by the Company and no material fraud on the Company by its officers oremployees has been noticed or reported during the period.
xi. The Company has employees covered under section 197 of the Act and the remunerationpaid is below the limit specified under section 197 read with Schedule V of the CompaniesAct 2013.
xii The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theOrder is not applicable
xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Act for a few of thetransactions with the related parties. The details of related party transactions have beendisclosed in the financial statements as required by the applicable accounting standards.However documentation for determining Arm's Length in connection with Related PartyTransactions is not maintained. It is informed that the company takes approval of AuditCommittee and Board of Directors for Related Party Transactions during the year.
xiv. During the period the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause 3 ( xiv ) of the Order is not applicable to the Company.
xv. In our opinion and according to the information and explanations given to usduring the period the Company has not entered into any non-cash transactions with itsdirectors or persons connected with him and hence provisions of section 192 of the Act arenot applicable.
xvi. The Company is not required to be registered under section 45-I of the ReserveBank of India Act 1934.
ANNEXURE - B
ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THESTANDALONE FINANCIALSTATEMENTS OF APLAB LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 ofSection143 of the Companies Act 2013
We have audited the internal financial controls over financial reporting of AplabLimited as of 31st March 2021 in conjunction with our audit of thefinancialstatements 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 internalfinancialcontrols based on the internal control over financial reportingcriteriaestablished by the Company considering the essential components of internalcontrol stated inthe Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued bythe Institute of Chartered Accountants of India. These responsibilitiesinclude the designimplementation and maintenance of adequate internal financial controlsthat were operatingeffectively for ensuring the orderly and efficient conduct of itsbusiness including adherence tocompany's policies the safeguarding of its assets theprevention and detection of frauds anderrors the accuracy and completeness of theaccounting records and the timely preparation ofreliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols overfinancial reporting based on our audit.We conducted our audit in accordancewith theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting andthe Standards on Auditing to the extent applicable to an audit of internalfinancialcontrols both issued by the Institute of Chartered Accountants of India. ThoseStandards andthe Guidance Note require that we comply with ethical requirements and planand perform theaudit to obtain reasonable assurance about whether adequate internalfinancial controls overfinancial reporting was established and maintained and if suchcontrols operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence about the adequacyofthe internal financial controls system over financial reporting and their operatingeffectiveness.
Our audit of internal financial controls over financial reporting included obtaininganunderstanding of internal financial controls over financial reporting assessing therisk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness ofinternal control based on the assessed risk. The procedures selecteddepend on the auditor'sjudgment including the assessment of the risks of materialmisstatement of the financialstatements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriatetoprovide a basis for our adverse audit opinion on the Company's internal financialcontrolssystem over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto providereasonable assurance regarding the reliability of financial reporting and thepreparation offinancial statements for external purposes in accordance with generallyaccepted accountingprinciples. A company's internal financial control over financialreporting includes those policiesand procedures that (1) pertains to the maintenance ofrecords that in reasonable detailaccurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparationof financial statements inaccordance with generally accepted accounting principles and thatreceipts andexpenditures of the company are being made only in accordance withauthorizations ofmanagement and directors of the company; and (3) provide reasonableassurance regardingprevention or timely detection of unauthorized acquisition use ordisposition 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 includingthe possibility of collusion or improper management override ofcontrols material misstatementsdue to error or fraud may occur and not be detected. Alsoprojections of any evaluation of theinternal financial controls over financial reportingto future periods are subject to the risk that theinternal financial control overfinancial reporting may become inadequate because of changes inconditions or that thedegree of compliance with the policies or procedures may deteriorate.
According to the information and explanations given to us and based on our auditthefollowing material weaknesses have been identified as at 31st March 2021:
(a) The Company did not have appropriate internal controls for periodic reconciliationof physical inventory with the inventory records which may have resulted in misstatementof inventory valuesin the books of account.
(b) The adequacy of internal financial control over Servicing and Rental of MachinesIncome is inadequate in terms of In Warranty & Out of Warranty / AMC billingconsumption of spares and its invoicing follow up on renewals etc.
(c) Documentation for establishing arm's length pricing with related party transactionswas found to be inadequate.
(d) Inadequate internal controls in recording of financial transactions including BankReceivables Payables and other account reconciliations.
A material weakness' is a deficiency or a combination of deficiencies ininternal financialcontrol over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented ordetected on a timely basis.
In our opinion except for the effects/possible effects of the material weaknessesdescribed aboveon the achievement of the objectives of the control criteria the Companyhas maintained in all material respects adequate internalfinancial controls overfinancial reporting and such Internal financial Controls over financial reporting wereoperating effectively as of March 31 2021 based onthe internal control over financialreporting criteria established by the Company considering theessential components ofinternal control stated in the Guidance Note on Audit of InternalFinancial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants ofIndia.
We have considered the material weaknesses identified and reported above indeterminingthe nature timing and extent of audit tests applied in our audit of the March31 2021standalone financial statements of the Company and these material weaknesses donotaffect our opinion on the standalone financial statements of the Company.
For Puranik Kane & Company
ICAI Firm Reg. No. 120215W
Ashish Ashok Kane
M. No. 104076