The Members of
Apollo Micro Systems Limited
Report on the Audit of the Financial Statements
We have audited the accompanying financial statements of Apollo MicroSystems Limited (the Company') which comprise the Balance Sheet as at March31 2019 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year ended on thatdate and a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as the financial statements').
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Companies Act 2013 (the Act') in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended (Ind AS') and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for opinion
We conducted our audit of the financial statements in accordance withthe Standards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India (ICAI) together with the independence requirements thatare relevant to our audit of the financial statements under the provisions of the Act andthe Rules made thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the ICAI's Code of Ethics. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion on the financial statements.
Key audit matters
Key audit matters 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. We have determined the matters described below to be the key audit mattersto be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|1 Contingent liabilities and provisions ||Principal Audit Procedures |
|Probable Liability for Import Duty for Non fulfilment of Export Obligation under Zero Duty EPCG Scheme ||We evaluated and tested key controls in respect of this contingent liability and regulatory procedures which are found to be satisfactory for audit |
|The Company had availed import duty exemption of H1.61 crores in financial year 2014-15 under Zero Duty EPCG Scheme (the Scheme). As per this scheme the Company has export obligation equal to Six times of the duty exemption availed. The Company has obtained approval from the Concern Authorities for fulfilling the export obligations. This is a Contingent Liability which depends on performance of the export obligation by the Company with in the time period permitted. ||Our procedure included the following: |
| || We have perused the terms of Export Obligation under Zero Duty EPCG Scheme |
| || We have verified the amount of duty exemption availed under the scheme |
|The probability or provision for the contingent liability involves high degree of judgment and estimates by the management and hence the contingent liability is considered as a key audit matter Refer Note-32.2 to the Financial Statements || We have also verified the value and the period with in which export obligation to be fulfilled and extension of period approved by the Regulatory Authority |
| || We have also evaluated the significant judgment made by the management in its ability to perform the export obligations with in the period permitted for making provision as per requirement. |
| || The management expressed their proposals to have a quarterly review from next financial year for any likelihood and magnitude of any liability immediately. |
Information Other than the Financial Statements and Auditor'sReport Thereon
The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Management Discussion and Analysis Board's Report includingAnnexures to Board's Report Corporate Governance and Shareholder's Informationbut does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated.
If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the financial statements management is responsible forassessing 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the FinancialStatements
Our objectives are to obtain reasonable assurance about whether thefinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs 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 financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also :
Identify and assess the risks of material misstatement of thefinancial 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 internalcontrols.
Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's Report. However future events or conditionsmay cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the 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 publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016(the Order') issued by the Central Government in terms of Section 143 (11) ofthe Act we give in Annexure-A a statement on the matters specified in paragraphs 3 and 4of the Order.
2. As required by Section 143(3) of the Act based on our audit wereport that :
a) We have sought and obtained all the information and explanationswhich to thebest of 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 beenkept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income Statement of Changes in Equity and the Statement of Cash Flow dealtwith by this Report are in agreement with the relevant books of account.
d) In our opinion the aforesaid financial statements comply with theInd AS specified under 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 thedirectors as on March 31 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2019 from being appointed as a director in termsof Section 164 (2) of the Act.
f ) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in Annexure-B'. Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over financial.
3. With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and according tothe explanations given to us :
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its financial.
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts.
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
iv. The disclosures in the financial statements regarding holdings aswell as dealings in specified bank notes during the period from 8 November 2016 to 30December 2016 have not been made in these financial statements since they do not pertainto the financial year ended 31 March 2019.
4. With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of amendments to section 197(16)of the Act:
In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act. The remuneration paidto any director is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) ofthe Act which are required to be commented upon by us..
| ||For S.T Mohite & Co. |
| ||Chartered Accountants (Regd No: 011410S) |
| ||Sd/- |
|Place: Hyderabad ||M.T. Sreenivasa Rao |
|Date: May17th 2019 ||Partner (Membership No. 015635) |
TO THE INDEPENDENT AUDITORS' REPORT
With reference to Annexure A as referred to in paragraph 1 underReport on Other Legal and Regulatory Requirements' section of our report to theMembers of the Company on the standalone financial statement for the year ended 31 March2019 we report the following:
| ||Ref to CARO ||Report by Independent Auditors |
|1 ||3(i) ||Fixed Assets |
| ||3(i)(a) ||The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information. |
| ||3(i)(b) ||The Company has a regular program of physical verification of its fixed assets by which all fixed assets are verified on annual basis in our opinion the periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program all fixed assets were physically verified during the year. According to the information and explanation given to us no material discrepancies were noticed on such verification. |
| ||3(i)(c) ||According to the information and explanations given to us and the records examined by us and based on the examination of sale deeds conveyance deeds encumbrance certificates verified by us we report that the title deeds comprising all the immovable properties of lands buildings which are free hold are in the name of the Company as at the balance sheet date. |
|2 ||3(ii) ||Inventories |
| || ||As explained to us the inventories has been physically verified by the management during the year. In our opinion the frequency of such verification is reasonable. The Company has maintained proper records of inventory. There were no material discrepancies noticed on verification between the physical stock and the book records. |
|3 ||3(iii) ||Loans to parties covered by Sec.189 of the Companies Act2013 (the Act' ) |
| || ||According to the information and explanation given to us the Company has not granted any loans secured or unsecured to body corporate firms Limited Liability Firms or other parties covered in the register required to be maintained under section 189 of the Act. Accordingly the provisions of the clause 3 (iii) of the Order are not applicable to the Company for the year under review. |
|4 ||3(iv) ||Loans guarantees securities to and investments in other companies |
| || ||In our opinion and according to the information and explanation given to us the Company has no transactions for compliance U/s 185 and 186 of Companies Act 2013. Accordingly the Clause 3 (iv) is not applicable to the Company. |
|5 ||3(v) ||Acceptance of deposits |
| || ||In our opinion and according to the information and explanations given to us the Company has not accepted any deposits during the year as per provisions of Section 73 or 76 of the Act or any other relevant provisions of the Act and the relevant Rules framed thereunder. Accordingly the provisions of the Para 3 (v) of the Order are not applicable to the Company for the year under review. |
|6 ||3(vi) ||Maintenance of cost records |
| || ||According to the information and explanations given us the maintenance of cost records prescribed by the Central Government under section 148(1) of the Act read with Rule 3 of the Cost Audit Rules is not applicable to the Company. Accordingly cost audit under Sec.148(2) of the Act read with Rule 4 of the Cost Audit Rules under Para 3(vi) of the Order is not applicable to the Companyfor the year under review. |
|7 ||3(vii) ||Statutory Dues |
| ||3(vii)(a) ||According to the information and explanations given to us and on the basis of our examination of the records of the Company amounts deducted / accrued in the books of account in respect of undisputed statutory dues including Provident Fund Employee's State insurance Income Tax Goods and Service Tax duty of Customs Cess and other material statutory dues have been generally deposited during the year by the Company with the appropriate authorities. According to the information and explanations given to us no undisputed amounts payable in respect of Provident Fund Employees' State Insurance Income tax Goods and Service Tax duty of Customs Cess and other material statutory dues in arrears as at March 31 2019 for a period of more than six months from the date they became payable. |
| ||3(vii)(b) ||According to the information and explanation given to us there are no dues of statutory dues of Income tax sales tax Service tax Goods and Service tax Customs duty Excise duty Value added tax cess and other dues that have not been deposited by the Company on account of any disputes. |
|8 ||3(viii) ||Defaults in repayments to Financial Institutions/Banks/Debenture holders |
| || ||In our opinion and according to the information and explanation given to us the Company has not defaulted in the payment/ repayments of loans or borrowings to the banks. |
|9 ||3(ix) ||Initial public offer/further offer |
| || ||In our opinion and according to the information and explanation given to us the Company has not made during the year under review any initial public offer or further public offer of securities (including debt instruments) or the term loans during the year and hence reporting under Para 3(ix) of the Order is not applicable to the Company. |
|10 ||3(x) ||Frauds by or on the Company |
| || ||In our opinion and according to the information and explanation given to us no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit. |
|11 ||3(xi) ||Managerial Remuneration |
| || ||In our opinion and according to the information and explanation given to us based on the examination of the records of the Company the Company has paid/provided managerial remuneration in accordance with the requisite approvals and compliances mandated by the provisions of section 197 read with Schedule V to the Act. |
|12 ||3(xii) ||Nidhi Company |
| || ||In our opinion and according to the information and explanation given to us the Company is not a Nidhi Company as prescribed under Section 406 of the Act and hence paragraph 3(xii) of the Order is not applicable to the Company. |
|13 ||3(xiii) ||Transactions with Related parties |
| || ||In our opinion and according to the information and explanation given to us and based on our examination of the records of the Company all transactions with related parties are in compliance with provisions of section 177 and section 188 of the Act where applicable and the details of such transactions have been disclosed in the standalone financial statements as required by the applicable Indian Accounting Standards. |
|14 ||3(xiv) ||Preferential allotment u/s 62 or private placement u/s 42 of the Act |
| || ||In our opinion and according to the information and explanation given to us and based on our examination of the records the Companyhas not made any preferential allotment of equity shares during the year. There is no private placement of shares by the Companyunder section 42 of the Act during the year. |
|15 ||3(xv) ||Non-cash transactions with directors u/s 192 of the Act |
| || ||In our opinion and according to the information and explanation given to us and based on our examination of the records of the Company the Company has not entered during the year into any non cash transactions with its Directors or persons connected to its Directors and hence provisions of Sec 192 of the Act and paragraph 3(xv) of the Order are not applicable to the Company. |
|16 ||3(xvi) ||Registration u/s 45-1A of Reserve Bank of India Act1934 |
| || ||According to the information and explanation given to ustheCompany is not required to be registered under section 45-1A of the Reserve bank of India Act 1934 and hence paragraph 3(xvi) of the Order is not applicable to the Company. |
For S.T Mohite & Co.
Chartered Accountants (Regd No: 011410S)
M.T. Sreenivasa Rao
Partner (Membership No. 015635)
Date: May17th 2019
TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f ) under Report on Other Legal andRegulatory Requirements' section of our report to the Members of Apollo Micro SystemsLimited of even date)
Report on the Internal Financial Controls Over Financial Reportingunder Para (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (theAct')
We have audited the internal financial controls over financialreporting of Apollo Micro Systems Limited ("the Company") as of March 31 2019in conjunction with our audit of the financial statements of the Company for the yearended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. 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 respective 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.
Our responsibility is to express an opinion on the internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy 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 control based on the assessed risk. Theprocedures selected depend on the auditor's judgement 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 andappropriate to provide a basis for our audit opinion on the internal financial controlssystem over financial reporting of the Company.
Meaning of Internal Financial Controls Over Financial Reporting
A Company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial controlover 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.
Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to theexplanations given to us 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 March 31 2019 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 Institute of CharteredAccountants of India.
For S.T Mohite & Co.
Chartered Accountants (Regd No: 011410S)
M.T. Sreenivasa Rao
Partner (Membership No. 015635)
Date: May 17th 2019