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Avantel Ltd.

BSE: 532406 Sector: Telecom
NSE: N.A. ISIN Code: INE005B01019
BSE 00:00 | 11 Jun 552.20 4.95
(0.90%)
OPEN

555.00

HIGH

559.25

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536.25

NSE 05:30 | 01 Jan Avantel Ltd
OPEN 555.00
PREVIOUS CLOSE 547.25
VOLUME 11482
52-Week high 589.90
52-Week low 212.00
P/E 14.60
Mkt Cap.(Rs cr) 224
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 555.00
CLOSE 547.25
VOLUME 11482
52-Week high 589.90
52-Week low 212.00
P/E 14.60
Mkt Cap.(Rs cr) 224
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Avantel Ltd. (AVANTEL) - Auditors Report

Company auditors report

To

The Members of AVANTEL Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Avantel Limited (the Company) which comprise the balance sheet as at 31st March 2020 and the statement of profit and loss statement of changes in equity and statement of cash flows for the year then ended and notes to the financial statements including a summary of significant accounting policies and other explanatory information. In our opinion and to the best of our information and according to the explanations given to us the aforesaid financial statements give the information required by the Companies Act 2013 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31 2020 and its profit changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to Note 47 of the financial statements which describes the extent to which the COVID-19 Pandemic will impact the Company's results which depend on future developments that are highly uncertain. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were 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 a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.

Key Audit MatterHow the Matter was addressed in Audit
Fair value assessment of trade receivablesWe assessed the validity of material long outstanding receivables which are Nil by reviewing the customer ledger during current year. We also considered payments received subsequent to year-end and unusual patterns if any were reviewed to identify potentially impaired balances. The assessment of the appropriateness of the allowance for trade receivables comprised a variety of audit procedures across the Group including:
Trade receivables comprise a significant portion of the liquid assets of the Company. The trade receivables are mostly dues receivable from Government and allied Government agencies hence not impaired. There was no provision made on the trade receivable in the previous year. The most significant portion of the trade receivables less than one year comprises which are dues from Government and Government agencies hence not impaired. Accordingly the estimation of the allowance for trade receivables is a significant judgment area and is therefore considered a key audit matter.
 Challenging the appropriateness and reasonableness of the assumptions applied in the directors' assessment of the receivables allowance;
 Consideration and concurrence of the agreed payment terms;
 Verification of receipts from trade receivables subsequent to year-end; and
 Considered the completeness and accuracy of the disclosures.
To address the risk of management bias we evaluated the results of our procedures against audit procedures on other key balances to assess whether or not there was an indication of bias.
We were satisfied that the Company's trade receivables are fairly valued and no provision is deemed to be required against these receivables.
Revenue recognitionOur audit procedures in respect of this area included:
The Company applies judgment to determine whether each goods software product or services promised to a customer are capable of being distinct and are distinct in the context of the contract if not the promised goods software product or services are combined and accounted as a single performance obligation. The Company allocates the arrangement consideration to separately identifiable performance obligation deliverables based on their selling price determined in contract.We evaluated the effectiveness of key controls over the capture and measurement of revenue transactions across all material revenue streams
Testing controls over software product sales including:
The accuracy and of revenue amounts recorded is an inherent industry risk - documentation evidencing internal and third party physical inspection and confirmation of complete status;
Disclosures relating revenue recognition are in Note 23We evaluated the adequacy of the disclosures included in Note 23

Revenue recognition

Our audit procedures in respect of this area included:

The Company applies judgment to determine We evaluated the effectiveness of key controls over the capture and whether each goods software product or services measurement of revenue transactions across all material revenue streams promised to a customer are capable of being distinct Testing controls over software product sales including: and are distinct in the context of the contract if not - documentation evidencing internal and third party physical inspection the promised goods software product or services and confirmation of complete status; are combined and accounted as a single performance obligation. The Company allocates the arrangement We evaluated the adequacy of the disclosures included in Note 23 consideration to separately identifiable performance obligation deliverables based on their selling price determined in contract. The accuracy and of revenue amounts recorded is an inherent industry risk Disclosures relating revenue recognition are in Note 23

Other Information

The Company's Board of Directors is responsible for the other information. The other information comprises the other information included in Management Discussion and Analysis Board's Report including Annexures to Board's Report Business Responsibility Report Corporate Governance and Shareholder's Information but does not include the financial statements and our auditor's report theron and we do not express any form of assurance conclusion thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act 2013 (the Act) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position financial performance changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India including the accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error.

In preparing the financial statements the Board of Directors is responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.

Those Board of Directors are also 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 financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.

 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the 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's report. However future events or conditions may cause the Company to cease to continue as a going concern.

 Evaluate the overall presentation structure and content of the financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters.

We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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 of India in terms of sub-section (11) of section 143 of the Companies Act 2013 we give in the Annexure-A a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the best 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 been kept by the Company so far as it appears from our examination of those books

c) The Balance Sheet the Statement of Profit and Loss the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account

d) In our opinion the aforesaid standalone financial statements comply with the Accounting Standards 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 the directors as on 31st March 2020 taken on record by the Board of Directors none of the directors is disqualified as on 31st March 2019 from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls refer to our separate Report in Annexure B

g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of our information and according to the explanations given to us:

i. The Company does not have any pending litigations which would impact the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company.

For RAMANATHAM & RAO
Chartered Accountants
Firm Registration. No. 002934S
Sd/-
(K SREENIVASAN)
Place: HyderabadPartner
Date: 9th May 2020ICAI Membership No. 206421
UDIN : 20206421AAAADG8050

Annexure - A to the Independent Auditors' Report

The Annexure referred to in our Independent Auditors' Report to the members of the Avantel Limited on the Ind AS financial statements for the period ended 31st March 2020 we report that:

1.1 The Company is maintaining proper records showing full particulars including the Quantitative details and the situation of fixed assets.

1.2 The fixed assets have been physically verified by the Management at reasonable intervals and according to the information and explanations given to us no material discrepancies were noticed on such verification. In our opinion the periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its business.

1.3 According to the information and explanations given to us and on the basis of our examination of the records of the company the title deeds of immovable property are held in the name of company. In respect of immovable properties been taken on lease and disclosed as property plant and equipment in the Ind AS financial statements the lease agreements are in the name of the Company.

2.1 The inventory 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. The discrepancies noticed on verification between the physical stock and book records were not material.

3.1 According to the information and explanations given to us the Company has not granted any loans secured or unsecured to companies firms limited liability partnerships or other parties covered in the register maintained under section 189 of the Act. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of the order are not applicable to the company.

4.1 In our opinion and according to the information and explanations given to us the Company has not given any loans made investments or provided securities to companies and other parties listed under section185 and 186 of the Act. Accordingly the provisions of clause 3(iv) of the order is not applicable to the company.

5.1 The Company has not accepted any deposits from the public within the meaning of Sections 73 to76 of the Act and rules framed thereunder.

6.1 In our opinion and according to the information and explanations given to us the maintenance of Cost records under section 148 (1) of the Act as prescribed by the Central Government are not applicable to the Company. Accordingly the provisions of clause 3(vi) of the order is not applicable to the company.

7.1 According to the information and explanations given to us and on the basis of our examination of the records the Company is generally regular in depositing undisputed statutory dues including provident fund employees state insurance income tax sales tax service tax Goods and Services Tax duty of customs duty of excise value added tax cess and other material statutory dues as applicable to the appropriate authorities have generally been regularly 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 sales tax service tax Goods and Services Tax duty of customs duty of excise value added tax cess and other material statutory were in arrears as at 31st March 2020 for a period of more than six months from the date they became payable.

7.2 According to the information and explanations given to us there are no material dues of income tax or sales tax or service tax or Goods and Services Tax or duty of customs or duty of excise or value added tax which have not been deposited by the company on account of dispute.

8.1 According to the information and explanations given to us the Company has not defaulted in the repayment of loans or borrowings to financial institutions and banks. The company did not have any outstanding loans or borrowings from financial institutions or Government and there are no dues to debenture holders during the year.

9.1 In our opinion and according to the information and explanations given to us the Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) and term loans. Accordingly paragraph 3(ix) of the Order is not applicable.

10.1 To the best of our knowledge and according to the information and explanations 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.

11.1 According to information and explanation given to us and based on our examination of records of the company the company has paid /provided for managerial remuneration with the requisite approvals mandated by the provisions of section 197 read with Schedule V of the Act.

12.1 In our opinion and according to the information and explanations given to us the Company is not a nidhi company. Accordingly paragraph 3(xii) of the Order is not applicable to the company.

13.1 According to the information and explanations given to us and based on our examination of the records of the Company transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the Ind AS financial statements as required by the applicable accounting standards.

14.1 According to the information and explanations given to us and based on our examination of records of the company the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly paragraph 3(xiv) of the Order is not applicable to the company.

15.1 According to the information and explanations given to us and based on our examination of records of the company the Company has not entered into non-cash transactions with directors or persons connected with them. Accordingly paragraph 3(xv) of the Order is not applicable to the company.

16.1 According to the information and explanations given to us the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For RAMANATHAM & RAO
Chartered Accountants
Firm Registration. No. 002934S
Sd/-
(K SREENIVASAN)
Place: HyderabadPartner
Date: 9th May 2020ICAI Membership No. 206421
UDIN : 20206421AAAADG8050

Annexure - B to the Independent Auditors' Report

(Referred to in paragraph (f) under `Report on Other Legal and Regulatory Requirements' section of our report of even date)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (the Act)

We have audited the internal financial controls over financial reporting of Avantel Limited (the Company) as of 31st March 2020 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (`ICAI'). These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the Guidance Note) and the Standards on Auditing issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 to the extent applicable to an audit of internal financial controls both applicable to an audit of Internal Financial Controls and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company'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 financial reporting including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2020 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For RAMANATHAM & RAO
Chartered Accountants
Firm Registration. No. 002934S
Sd/-
(K SREENIVASAN)
Place: HyderabadPartner
Date: 9th May 2020ICAI Membership No. 206421
UDIN : 20206421AAAADG8050