To the Members of AptechLimited
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of Aptech Limited(the Company'') which comprise the Balance Sheet as at March 31 2020 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity the Statement of Cash Flows for the year then ended and notes to thestandalone financial statements including a summary of the significant accountingpolicies and other explanatory information (hereinafter referred to as "thestandalone financial statements"). In our opinion and to the best of our informationand according to the explanations given to us the aforesaid standalone financialstatements give the information required by the Companies Act 2013 as amended ("theAct") in the manner so required and give a true and fair view in conformity with theIndian Accounting Standards prescribed under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended ("Ind AS") andother accounting principles generally accepted in India of the state of affairs of theCompany as at March 31 2020 its profit and total comprehensive income the changes inequity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the "Auditor'sResponsibilities for the Audit of the Standalone Financial Statements" section of ourreport. We are independent of the Company in accordance with the "Code ofEthics" issued by The Institute of Chartered Accountants of India ("ICAI")together with the ethical requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.
Emphasis of Matter
Attention is invited to Note 6.3 to the standalone financial statements whichindicates that in the absence of availability of audited financial statements of theinvestee in China for last about six years and other recent financial information theinvestments in equity instruments held by the wholly owned step-down foreign subsidiary inthe said investee is carried at cost being an appropriate estimate of fair value inaccordance with paragraph B5.2.3 of Appendix B on the Application Guidance to Ind AS 109on "Financial Instruments". Consequently the Company has continued to carry itsinvestments in equity instruments of its immediate wholly owned subsidiary at its cost of2135.67 lacs.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgement 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 for the year ended March 31 2020 and in forming our opinionthereon and we do not provide a separate opinion on these matters. We have determined thematters described below to be the key audit matters to be communicated in our report:
|The Key Audit Matters ||How the matter was addressed in the audit |
|Revenue Recognition || |
|Ind AS 115 on "Revenue from Contracts with Customers" provides a comprehensive framework for determining whether how much and when revenue is recognised. This involves certain key judgments relating to identification of distinct performance obligations if any determination of transaction price of identified performance obligations the appropriateness of the basis used to measure revenue recognised over a period or at a point in time. Additionally Ind AS 115 requires comprehensive disclosures. ||Our audit procedures included among others the following : |
| || Evaluated the design of the internal controls in terms of the requirements of Ind AS 115 for the manner of recognising revenue; |
| || Evaluated the accounting policy of recognising revenue; |
| || Evaluated the detailed analysis performed by management on revenue streams for each segment by selecting samples for the existing contracts with customers and considered revenue recognition policy in the current period in respect of those revenue streams; |
|The application and transition to Ind AS is complex and more particularly when an entity derives its revenue from providing services. The Company provides services to its customers under varied arrangements which are to be evaluated for recognition of revenue; also establishing an appropriate || Evaluated the appropriateness and assessed the completeness of the disclosures in accordance with the requirements of Ind AS 115. |
|year-end position requires significant judgment and estimation by management. Considering all these aspects the revenue recognition is considered to be a key audit matter. || |
|[Refer Notes 2.p. and 27 to the standalone financial statements]. || |
|Allowance for Expected Credit Loss of Trade Receivables and Unbilled Revenue || |
|Provision for impairment by way of Allowance for Expected Credit Loss (ECL) of Trade Receivables and Unbilled Revenue as also written off if any thereof require - ||Our audit procedures included among others the following : |
|? the appropriateness of accounting policies for determination of Allowance for ECL and the amounts to be written off as Bad Debts; ||? Obtained sufficient and appropriate audit evidence about whether policies operational procedures internal control systems and other relative assumptions for estimation and determination of Allowance for ECL are reasonable; |
|? operational procedures and systems of internal control in estimation of ECL and Bad Debts write off; ||? Objectively evaluated the estimates made in the broader context of the standalone financial statements as a whole; |
|? estimation of expected losses and appropriate assumptions and significant judgements on the recoverability of receivables; ||? Based on discussions with the management of the Company familiarised ourselves with the latter's analysis of the risks and status of each significant reported litigation; |
|? the completeness accuracy relevance and reliability of historical information; ||? Evaluated the lawyers' advice and communication with other parties to the suits; |
|? the Company's overall review of the estimate; and ||??Assessed the estimates and assumptions adopted by the Company in determining the need to recognise a provision and where applicable its amounts and if required the write off. |
|? the clarity and reasonableness of related ECL disclosures and Bad Debts write off. ||??Evaluated the completeness of disclosures in respect of Allowance for Expected Credit Lossand Bad Debts write off. |
|The Company has certain litigations for services provided under contracts with its customers. The Company's estimates of expected losses also considers the use of assumptions and assessments of outcome of these litigations. || |
|In view of the determination of the basis and quantum of Allowance of ECL and Bad Debts write off it is a significant item in the consolidated financial statements and hence considered to be a key audit matter. || |
|[Refer Notes 2.o.vi 10 and 14 to the standalone financial statements] || |
Information Other than the Standalone 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 the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the standalonefinancial statements and our auditor's report thereon. Our opinion on the standalonefinancial statements does not cover the other information and we do not express any formof assurance conclusion thereon. In connection with our audit of the standalone financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the standalone financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated. If based on the work we have performed we conclude thatthere is a material misstatement of this other information we are required to report thatfact. We have nothing to report in this regard.
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 Act with respect to the preparation and presentation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance (including other comprehensive income) changes in equity and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the Ind AS specified under Section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended. This responsibility also includesma intenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements the Board of Directors is 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of theStandalone Financial Statements
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 SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
? Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
? Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.
? Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
? Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
? Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements. We communicate withthose charged with governance regarding among other matters the planned scope and timingof the audit and significant audit findings including any significant deficiencies ininternal control that we identify during our audit. We also provide those charged withgovernance with a statement that we have complied with relevant ethical requirementsregarding independence and to communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence and where applicable relatedsafeguards. 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
1. As required by Section 143(3) of the Actwe 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 ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books; c. The Balance Sheet the Statement ofProfit and Loss (including Other Comprehensive Income) the Statement of Changes inEquity the Statement of Cash Flows and notes to the standalone financial statements dealtwith by this Report are in agreement with the books of account; d. In our opinion theaforesaid standalone financial statements comply with the Ind AS specified under Section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended;
e. On the basis of written representations received from the directors as on March 312020 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2020 from being appointed as a director in terms of Section 164(2) of theAct;
f. With respect to the internal financial controls with reference to financialstatements of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure A";
g. With respect to the matters to be included in the Auditor's Report in accordancewith requirement of Section 197 (16) of the Act as amended: In our opinion and to thebest of our information and according to the explanations given to us the remunerationpaid during the current year by the Company to its directors is in accordance with theprovisions of Section 197 read with Schedule V of the Act. and is not in excess of thelimit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has notprescribed other details under Section 197(16) of the Act which are required to becommented upon by us.
h. 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 has disclosed the impact of pending litigations on its financialposition in its standalone financial statements Refer Note 40 to the standalonefinancial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as required under the applicable law oraccounting standards;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company for the year ended March 312020.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act weenclose in the "Annexure B" a statement on the matters specified in paragraphs3 and 4 of the Order to the extent applicable.
ANNEXURE A TO THE INDEPENDENT AUDITORS'REPORT
Referred to in paragraph 1(f) under the heading of "Report on Other Legal andRegulatory Requirements" in our Independent Auditor's Report of even date on theStandalone Financial Statements for the year ended March 31 2020.
Report on the Internal Financial Controls with reference to Financial Statements underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls with reference to standalone financialstatements of Aptech Limited ("the Company") as of March 31 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal financial controls with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting ("the Guidance Note") issued by the Instituteof Chartered Accountants of India (ICAI''). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing issued by ICAI anddeemed to be prescribed under Section 143(10) of the Act to the extent applicable to anaudit of internal financial controls with reference to financial statements. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to financial statements were established and maintainedand if such controls operated effectively in all material respects. Our audit involvesperforming procedures to obtain audit evidence about the adequacy of the internalfinancial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement ofthe standalone financial statementswhether due to fraud or error. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion on the Company'sinternal financial controls with reference to financial statements.
Meaning of Internal Financial Controls with reference to Financial Statements
A company's internal financial control with reference to financial statements is aprocess 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 controlswith reference to financial statements includes those policies and procedures that: a.pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; b. providereasonable assurance that transactions are recorded as necessary to permit preparation ofthe financial statements in accordance with generally accepted accounting principles andthat receipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and c. provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls with reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects internal financial controls withreference to the standalone financial statements and such internal financial controls withreference to standalone financial statements were operating effectively as at March 312020 based on the internal controls over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote.
ANNEXURE B TO INDEPENDENT AUDITORS' REPORT
Referred to in Paragraph 2 under the heading of "Report on Other Legal andRegulatory Requirements" of our Independent Auditors' Report of even date on theStandalone Financial Statements for the year ended March 31 2020.
Report on the Companies (Auditor's Report) Order 2016 issued in terms of Section143(11) of the Companies Act 2013 ("the Act") of Aptech Limited ("theCompany") i. a. The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant and Equipment("PPE"). b. PPE have been physically verified by the management according to aphased programme designed to cover all PPE over a period of three years which in ouropinion provides for physical verification of all the items of PPE at reasonableintervals. Pursuant to the programme a material portion of the items of PPE have beenverified by the management during the year and no material discrepancies were noticed onsuch verification. c. According to the information and explanations given to us and on thebasis of our examination of the records of the Company the title deeds of immovableproperties as included in Note 4 of standalone financial statements are held in the nameof the Company. ii. Inventories have been physically verified by the management during theyear. In our opinion the frequency of such verification is reasonable and no materialdiscrepancies were noticed on such physical verification. iii. In an earlier year theCompany has granted interest-free advance of 5.40 lakhs to its wholly owned subsidiarycompany and a loan of 20.02 lakhs (balance outstanding as on March 31 2020) to its WholeTime Director covered in the Register maintained under Section 189 of the Act. In ouropinion and according the information and explanations given to us the terms andconditions whereof are prima facie not prejudicial to the interest of theCompany. According to the information and explanations given to us and on the basis of ourexamination the schedule of repayment of principal and interest for the loan to the WholeTime Director has been stipulated and repayments of principal and interest have beenregular as per stipulations. There is no stipulation in respect of repayment ofinterest-free advance to the wholly owned subsidiary. There are no amounts overdue formore than ninety days as at March 31 2020. iv. In our opinion and according to theinformation and explanations given to us except for advance to wholly owned subsidiary of5.40 lakhs which is interest-free the Company has complied with the provisions ofSections 185 and 186 of the Act with respect to the loans and investments made. TheCompany has not given any guarantee or provided any security in connection with a loan toany person or other body corporate and accordingly the question of commenting oncompliance with the provisions in respect thereof does not arise. v. In our opinion andaccording to the information and explanations given to us the
Company has not accepted any deposit from the public. Accordingly paragraph 3(v) ofthe Order to comment on whether the Company has complied with the directives issued by theReserve Bank of India and the provisions of Sections 73 to 76 or any other relevantprovisions of the Act and rules framed thereunder is not applicable. vi. According to theinformation and explanations given to us pursuant to the Companies (Cost Records andAudit) Rules 2014 read with Section 148(1) of the Act the Central Government has notprescribed maintenance of cost records in respect of any of the Company's products.Accordingly paragraph 3(vi) of the Order is not applicable to the Company. vii. a.According to the information and explanations given to us and on the basis of the booksand records examined by us the Company has been regular in depositing the undisputedstatutory dues including Provident Fund Employees' State Insurance Income-tax Goodsand Service Tax Cess and other material statutory dues as applicable to it with theappropriate authorities in India. There are no arrears of outstanding statutory dues onthe last day of the financial year for a period of more than six months from the datethey become payable. b. According to the information and explanations given to us and onthe basis of the books and records examined by us there are no material dues ofIncome-tax Service Tax and Goods and Service Tax which have not been deposited on accountof any disputes. viii. According to the information and explanations given to us as alsoon the basis of the books and records examined by us the Company has not defaulted in therepayment of loans or borrowings from banks. The Company has not taken any loan orborrowing from financial institutions or Government and has not issued any debentureduring the year. ix. According to the information and explanations given to us and on thebasis of the books and records examined by us the Company has not raised any money by wayof initial public offer or further public offer (including debt instruments) and termloans during the year. Accordingly reporting requirements as per provisions of paragraph3(ix) of the Order are not applicable to the Company. x. According to the information andexplanations given to us no material fraud by the
Company or on the Company by its officers or employees has been noticed or reportedduring the year in the course of our audit. xi. According to the information andexplanations given to us and based on our examination of the records of the Company theCompany has paid/provided for managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the Act. Alsothe excess remuneration of 73.92 lakhs paid to the erstwhile Managing Director for theFinancial Year 2014-15 is being recovered from the erstwhile Managing Director pursuant tothe approval received from the Central Government. The Company has already recovered 49.06lakhs out of the aforesaid amount. xii. The Company is not a Nidhi Company. Accordinglyparagraph 3(xii) of the Order is not applicable to the Company. xiii. According to theinformation and explanations given to us and based on our examination of the records ofthe Company transactions with the related parties are in compliance with the provisionsof Sections 177 and 188 of the Act where applicable and details of such transactions havebeen disclosed in the standalone financial statements as required by the applicableaccounting standards. xiv. According to the information and explanations given to us andon the basis of the books and records examined by us the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review. Accordingly reporting under paragraph 3(xiv) ofthe Order is not applicable. xv. According to the information and explanations given to usand based on our examination of the records the Company has not entered into non-cashtransactions with any of the directors or any person connected with them. Accordinglyparagraph 3(xv) of the Order is not applicable. xvi. The Company is not required to beregistered under Section 45-IA of the Reserve Bank of India Act 1934. Accordinglyparagraph 3(xvi) of the Order is not applicable to the Company.