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Centum Electronics Ltd.

BSE: 517544 Sector: Engineering
NSE: CENTUM ISIN Code: INE320B01020
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VOLUME 1305
52-Week high 659.20
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P/E 27.02
Mkt Cap.(Rs cr) 540
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OPEN 430.00
CLOSE 428.45
VOLUME 1305
52-Week high 659.20
52-Week low 390.00
P/E 27.02
Mkt Cap.(Rs cr) 540
Buy Price 419.10
Buy Qty 6.00
Sell Price 421.10
Sell Qty 33.00

Centum Electronics Ltd. (CENTUM) - Auditors Report

Company auditors report

To the Members of Centum Electronics Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statementsof Centum Electronics Limited ("the Company") which comprise the Balance sheetas at March 31 2022 the Statement of Profit and Loss including the statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and notes to the standalone Ind AS financial statements including asummary of significant accounting policies and other explanatory information

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone IndAS financial statements give theinformation required by the Companies Act 2013 as amended ("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 2022 its profit including other comprehensive income its cash flows and the changesinequity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone Ind AS financial statements inaccordance with the Standards on Auditing (SAs) as specified under section 143(10) of theAct. Our responsibilities 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 of Ethics' issuedby the Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the standalone Ind AS financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone Ind AS financial statements.

Emphasis of Matter

We draw attention to the Note 54 to the accompanying standalone Ind ASfinancial statements for the year ended March 31 2022 which describes the uncertaintiesand management assessment of the financial impact of the outbreak of Corona virus(COVID-19) on the business operations liquidity position and recoverability of assets ofthe Company and its subsidiaries. In view of the highly uncertain economic environment adefinitive assessment of the aforesaid impact on the subsequent periods is dependent uponcircumstances as they evolve.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements forthe financial year ended March 31 2022. These matters were addressed in the context ofour audit of the standalone Ind AS financial statements as a whole and in forming ouropinion thereon and we do not provide a separate opinion on these matters. For eachmatter below our description of how our audit addressed the matter is provided in thatcontext.

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the standalone Ind AS financialstatements section of our report including in relation to these matters. Accordingly ouraudit included the performance of procedures designed to respond to our assessment of therisks of material misstatement of the standalone Ind AS financial statements. The resultsof our audit procedures including the procedures performed to address the matters belowprovide the basis for our audit opinion on the accompanying standalone Ind AS financialstatements.

Key audit matters How our audit addressed the key audit matter
Allowance for inventory obsolescence Our procedures in relation to evaluate the allowance of inventories included:
 

(as described in note 2.3(k) note 10 and note 40 of the standalone Ind AS financial statements)

• We obtained an understanding of how the management identifies the slow-moving and obsolete inventories and assesses the amount of allowance for inventories;
The Company held an inventory balance of Rs 1986.57 million as at March 31 2022 as disclosed in Note 10 and is a material balance for the Company. Inventory obsolescence allowance is determined using policies/methodologies that the Company deems appropriate to the business. Significant judgement is exercised by the management in identifying the slow-moving and obsolete inventories and in assessing whether provision for obsolescence for slow moving excess or obsolete inventory items should be recognized considering the production plan forecast inventory usage committed and expected orders alternative usage etc. Considering that the aforesaid assessment process is complex and involves significant estimates and judgements and the balance of inventory is material we have identified this as a key audit matter. • We assessed and tested the design and operating effectiveness of the Company's internal financial controls over the allowance for inventory obsolescence;
• We observed the inventory count performed by management and assessed the physical condition of the inventories;
• We also assessed the allowance policy based on historical sales performance of the products in their life cycle and comparing the actual loss to historical allowance recognized on a sample basis;
• We further tested the ageing of the inventories and the computation of the obsolescence level on a sample basis;
• We have tested a sample of inventory items for significant components to assess the cost and tested the basis of determination of net realisable value of inventory on a sample basis;
• We also assessed the Company's disclosures concerning this in Note 40 on significant accounting estimates and judgements and Note 10 on Inventories to the standalone Ind AS financial statements.
Impairment testing of investments in a subsidiary Our procedures in relation to evaluate the impairment of investment included:
(as described in note 2.3(l) note 5 and note 40 of the standalone Ind AS financial statements) • We assessed whether the Company's accounting policy with respect to impairment is in accordance with Ind AS 36 "Impairment of assets.
As at March 31 2022 the carrying amount of investment in Centum Electronics UK Limited a subsidiary of the Company is Rs 613.59 million which has underlying investment in Adetel Group SA ('Adetel'). Adetel has incurred losses in the earlier years whereby the carrying value of the investment in Adetel as at March 31 2022 is higher than Adetel's net worth. The determination of recoverable amounts of the Company's investments in Centum Electronics UK Limited relies on management's estimates of future cash flows and their judgment with respect to the Adetel's performance. Significant judgements are required to determine the key assumptions used in the discounted cash flow models such as revenue growth price terminal value and discount rates. Due to the uncertainty of forecasting and discounting future cash flows being inherently subjective the level of management's judgement involved and the significance of the Company's investment as at March 31 2022 we have considered this as a key audit matter. • We have carried out assessment of forecasts of future cash flows prepared by the management evaluating the assumptions and comparing the estimates to externally available industry economic and financial data;
The basis of impairment of investment in subsidiary is presented in the accounting policies in Note 2.3(l) to the standalone Ind AS financial statements. • We have also assessed the valuation methodology and the key assumptions adopted in the cash flow forecasts with the support of our in-house valuation experts;
• We also assessed the recoverable value headroom by performing sensitivity testing of key assumptions used.
• We discussed potential changes in key drivers as compared to previous year / actual performance with management to evaluate whether the inputs and assumptions used in the cash flow forecasts were appropriate.
• We discussed with senior management personnel the justification for the key assumptions underlying the cashflow projections and performed sensitivity analysis on the same to assess their reasonableness;
• We tested the arithmetical accuracy of the financial projection model;
• We assessed the Company's disclosures concerning this in Note 40 on significant accounting estimates and judgements and Note 5 pertaining to the disclosures of investment in subsidiary to the standalone Ind AS financial statements.

Information Other than the Standalone Ind AS Financial Statements andAuditor's Report Thereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annualreport but does not include the standalone Ind AS financial statements and our auditor'sreport thereon. The other information is expected to be made available to us after thedate of this auditor's report.

Our opinion on the standalone Ind AS financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.

In connection with our audit of the standalone Ind AS financialstatements our responsibility is to read the other information identified above when itbecomes available and in doing so consider whether such other information is materiallyinconsistent with the standalone Ind AS financial statements or our knowledge obtained inthe audit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact.

Responsibilities of Management for the Standalone Ind AS FinancialStatements

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone Ind ASfinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended. 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; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone Ind AS financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists. 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 standalone Ind AS financialstatements.

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 thestandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to standaloneInd AS financial statements in place and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of management's 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 standalone Ind AS financial statements or if such disclosuresare inadequate 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 conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.

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 standalone IndAS financial statements for the financial year ended March 31 2022 and are therefore thekey audit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure 1" a statement on thematters specified in paragraphs 3 and 4 of the Order.

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

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

(b) In our opinion proper books of account as required by law havebeen 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 including theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Companies (Indian Accounting Standards) Rules 2015 as amended;

(e) The matter described in Emphasis of Matter above in our opinionmay have an adverse effect on the functioning of the Company;

(f) On the basis of the written representations received from thedirectors as on March 31 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2022 from being appointed as a director in termsof Section 164 (2) of the Act;

(g) With respect to the adequacy of the internal financial controlswith reference to these standalone Ind AS financial statements and the operatingeffectiveness of such controls refer to our separate Report in "Annexure 2" tothis report;

(h) In our opinion the managerial remuneration for the year endedMarch 31 2022 has been paid / provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V to the Act;

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

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements - Refer Note 44 (c)(iv)to the standalone Ind AS financial statements;

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

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

iv. a) The management has represented that to the best of itsknowledge and belief other than as disclosed in the Note 56(v) to the standalone Ind ASfinancial statements no funds have been advanced or loaned or invested (either fromborrowed funds or share premium or any other sources or kind of funds) by the Company toor in any other persons or entities including foreign entities("Intermediaries") with the understanding whether recorded in writing orotherwise that the Intermediary shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of theCompany ("Ultimate Beneficiaries") or provide any guarantee security or thelike on behalf of the Ultimate Beneficiaries;

b) The management has represented that to the best of its knowledgeand belief other than as disclosed in the Note 56(vi) to the standalone Ind AS financialstatements no funds have been received by the Company from any persons or entitiesincluding foreign entities ("Funding Parties") with the understanding whetherrecorded in writing or otherwise that the Company shall whether directly or indirectlylend or invest in other persons or entities identified in any manner whatsoever by or onbehalf of the Funding Party ("Ultimate Beneficiaries") or provide any guaranteesecurity or the like on behalf of the Ultimate Beneficiaries; and

c) Based on such audit procedures performed that have been consideredreasonable and appropriate in the circumstances nothing has come to our notice that hascaused us to believe that the representations under subclause (a) and (b) contain anymaterial misstatement.

v. As stated in note 17 to the standalone Ind AS financial statementsthe final dividend paid by the Company during the year in respect of the same declared forthe previous year and the final dividend proposed by the Board of Directors for the yearwhich is subject to the approval of the members at the ensuing Annual General Meeting isin accordance with section 123 of the Act to the extent it applies to payment /declaration of dividend.

Annexure 1 referred to in clause 1 of paragraph on the 'Report on OtherLegal and Regulatory Requirements' of our report of even date

Re: Centum Electronics Limited ('the Company')

In terms of the information and explanations sought by us and given bythe Company and the books of account and records examined by us in the normal course ofaudit and to the best of our knowledge and belief we state that:

(i) (a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant andequipment.

(a) (B) The Company has maintained proper records showing fullparticulars of intangible assets.

(b) All property plant and equipment have not been physically verifiedby the management of the Company during the year but there is a regular programme ofverification which in our opinion is reasonable having regard to the size of the Companyand the nature of its assets. No material discrepancies were noticed on such verification.

(c) The title deeds of immovable properties (other than propertieswhere the Company is the lessee and the lease agreements are duly executed in favour ofthe lessee) disclosed in note 3 to the standalone Ind AS financial statements included inproperty. plant and equipment are held in the name of the Company. Certain immovableproperties are pledged with banks and their title deeds are not available with theCompany. The same has been independently confirmed by the bank.

(d) The Company has not revalued its property plant and equipment(including right of use assets) or intangible asset during the year ended March 31 2022.

(e) There are no proceedings initiated or are pending against theCompany for holding any benami property under the Prohibition of Benami PropertyTransactions Act. 1988 and rules made thereunder.

(ii) (a) The management has conducted physical verification ofinventory including inventory lying with third parties except goods in transit atreasonable intervals during the year. In our opinion the coverage and the procedure ofsuch verification by the management is appropriate. Discrepancies of 10% or more inaggregate for each class of inventory were not noticed on such physical verification andconfirmation.

(b) As disclosed in note 18 and 21 to the standalone Ind AS financialstatements. the Company has been sanctioned working capital limits in excess of Rs. fivecrores in aggregate from banks and/or financial institutions during the year on the basisof security of current assets of the Company. Based on the records examined by us in thenormal course of audit of the standalone Ind AS financial statements. the quarterlyreturns/statements filed by the Company with such banks and financial institutions are inagreement with the books of accounts of the Company.

(iii) (a) During the year the Company has not provided loans. advancesin the nature of loans stood guarantee or provided security to companies. firms. LimitedLiability Partnerships or any other parties. However the Company has an outstanding loanof Rs. 20 million as at March 31 2022 to Centum Adeneo India Private Limited ('CAIPL) asubsidiary company.

(b) During the year the Company has not made investments providedguarantees provided security and granted loans and advances in the nature of loans tocompanies. firms. Limited Liability Partnerships or any other parties. However the Companyhas an outstanding loan of Rs. 20.00 million to CAIPL a subsidiary company and investmentof Rs.1.00 million in CAIPL a subsidiary company as at March 31 2022.

(c) In respect of loan granted to subsidiary company the schedule ofrepayment of principal and payment of interest has been stipulated and the receipts areregular.

(d) There are no amounts of loans and advances in the nature of loansgranted to companies. firms. limited liability partnerships or any other parties which areoverdue for more than ninety days.

(e) There were no loans or advances in the nature of loans granted tocompanies. firms. Limited Liability Partnerships or any other parties which had fallen dueduring the year.

(f) The Company has not granted any loans or advances in the nature ofloans either repayable on demand or without specifying any terms or period of repaymentto companies. firms. Limited Liability Partnerships or any other parties. Accordingly therequirement to report on clause 3(iii)(f) of the Order is not applicable to the Company.

(iv) Loans investments guarantees and security in respect of whichprovisions of sections 185 and 186 of the Companies Act 2013 ('the Act') are applicablehave been complied with by the Company..

(v) The Company has neither accepted any deposits from the public noraccepted any amounts which are deemed to be deposits within the meaning of sections 73 to76 of the Act and the rules made thereunder to the extent applicable. Accordingly therequirement to report on clause 3(v) of the Order is not applicable to the Company andhence not commented upon.

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government for the maintenance of costrecords under section 148(1) of the Act related to the products manufactured by theCompany and are of the opinion that prima facie the specified accounts and records havebeen made and maintained. We have not however made a detailed examination of the same.

(vii) (a) Undisputed statutory dues including goods and services taxprofessional tax provident fund employees' state insurance income-tax custom dutycess and other material statutory dues as applicable to the Company have generally beenregularly deposited with the appropriate authorities. According to the information andexplanations given to us and based on audit procedures performed by us undisputed dues inrespect of goods and services tax provident fund employees' state insurance income-taxservice tax sales-tax duty of custom duty of excise value added tax cess and otherstatutory dues as applicable to the Company which were outstanding at the year end for aperiod of more than six months from the date they became payable are as follows:

Statement of arrears of statutory dues outstanding for more than sixmonths

Name of the Statute Nature of the Dues Amount (in INR million) Period to which the amount relates Due Date Date of Payment
The Employees Provident Funds and Miscellaneous Provisions Act 1952 Provident fund 3.33 February 2019 - April 2019 Various dates Not paid
Bruhat Bengaluru Mahanagara Palike Property Tax 7.54 April 01- 2017 to September 30 2021 Various dates Not paid

(b) The dues of goods and services tax provident fund employees'state insurance income-tax sales-tax service tax duty of custom duty of excise valueadded tax cess and other statutory dues which have not been deposited on account of anydispute are as follows:

Name of the Statute Nature of the Dues Amount (in INR million) Period to which the amount relates Forum where the dispute is pending
Income Tax Act 1961 Disallowance of exemptions 46.44 Financial year 20162017 Commissioner of Income Tax (Appeals) - Bangalore
Karnataka Value Added Tax 2005 Commercial Tax 6.49 Financial year 2013-2014 High Court
Central Excise Act 1944 Non-payment of service tax 52.52 (3.54)* Financial year 2009-2010 to 2014-2015 Customs Excise and Service Tax Appellate Tribunal CCESTAT) Bangalore
Central Excise Act 1944 Non-payment of service tax 36.73 Financial year 2015-16 to 2017-18 Customs Excise and Service Tax Appellate Tribunal CCESTAT1) Bangalore
Central Excise Act 1944 Disallowance of CENVAT Credit availed 9.99 Financial year 2004-2005 to 2005-2006 Commissioner of Central Excise Bangalore
Central Excise Act 1944 Disallowance of CENVAT Credit availed 22.26 Financial year 2010-2011 to 2012-2013 CESTAT Bangalore
The Karnataka Stamp Act 1957 Stamp duty 16.28 Financial year 2007-08 The District Registrar Gandhinagar Registration District
The Goods and Service Tax Act Recovery of erroneous refund sanctioned 2.72 Financial year 2017-2018 Additional Commissioner Central tax (Appeals)
Bruhat Bengaluru Mahanagara Palike Property tax 5.89 FY 2021-2022 Bruhat Bengaluru Mahanagara Palike

* Amount in parenthesis represents the payment made under protest.

(viii) The Company has not surrendered or disclosed any transactionpreviously unrecorded in the books of account in the tax assessments under the Income TaxAct 1961 as income during the year. Accordingly the requirement to report on clause3(viii) of the Order is not applicable to the Company.

(ix) (a) The Company has not defaulted in repayment of loans or otherborrowings or in the payment of interest thereon to any lender.

(b) The Company has not been declared wilful defaulter by any bank orfinancial institution or other government or any government authority.

(c) The Company did not take any new term loans during the year andhence the requirement to report on clause (ix)(c) of the Order is not applicable to theCompany.

(d) On an overall examination of the standalone Ind AS financialstatements of the Company no funds raised on short-term basis have been used forlong-term purposes by the Company.

(e) On an overall examination of the standalone Ind AS financialstatements of the Company the Company has not taken any funds from any entity or personon account of or to meet the obligations of its subsidiaries or associates.

(f) The Company has not raised loans during the year on the pledge ofsecurities held in its subsidiaries or associate companies. The Company does not have anyjoint venture. Hence the requirement to report on clause (ix)(f) of the Order is notapplicable to the Company.

(x) (a) The Company has not raised any money during the year by way ofinitial public offer/ further public offer (including debt instruments) hence therequirement to report on clause 3(x)(a) of the Order is not applicable to the Company.

(b) The Company has not made any preferential allotment or privateplacement of shares /fully or partially or optionally convertible debentures during theyear under audit and hence the requirement to report on clause 3(x)(b) of the Order isnot applicable to the Company.

(xi) (a) No fraud by the Company or no fraud / material fraud on theCompany has been noticed or reported during the year.

(b) During the year no report under sub-section (12) of section 143 ofthe Act has been filed by cost auditor secretarial auditor or by us in Form ADT - 4 asprescribed under Rule 13 of Companies (Audit and Auditors) Rules 2014 with the CentralGovernment.

(c) As represented to us by the management of the Company there are nowhistle blower complaints received by the Company during the year.

(xii) The Company is not a Nidhi Company as per the provisions of theAct. Therefore the requirement to report on clause 3(xii)

(a) to (c) of the Order is not applicable to the Company.

(xiii) Transactions with the related parties are in compliance withsections 177 and 188 of the Act where applicable and the details have been disclosed inthe notes to the standalone Ind AS financial statements as required by the applicableaccounting standards.

(xiv) (a) The Company has an internal audit system commensurate withthe size and nature of its business.

(b) The internal audit reports of the Company issued till the date ofthe audit report for the period under audit have been considered by us.

(xv) The Company has not entered into any non-cash transactions withdirectors or persons connected with the directors as referred to in section 192 of the Actand hence requirement to report on clause 3(xv) of the Order is not applicable to theCompany.

(xvi) (a) The provisions of section 45-IA of the Reserve Bank of IndiaAct 1934 (2 of 1934) are not applicable to the Company. Accordingly the requirement toreport on clause (xvi)(a) of the Order is not applicable to the Company.

(b) The Company is not engaged in any Non-Banking Financial or HousingFinance activities. Accordingly the requirement to report on clause (xvi)(b) of the Orderis not applicable to the Company.

(c) The Company is not a Core Investment Company as defined in theregulations made by Reserve Bank of India. Accordingly the requirement to report onclause 3(xvi)(c) of the Order is not applicable to the Company.

(d) There is no Core Investment Company as a part of the Group hencethe requirement to report on clause 3(xvi)(d) of the Order is not applicable to theCompany.

(xvii) The Company has not incurred cash losses in the currentfinancial year or the immediately preceding financial year.

(xviii) There has been no resignation of the statutory auditors duringthe year and accordingly requirement to report on clause 3(xviii) of the Order is notapplicable to the Company.

(xix) On the basis of the financial ratios disclosed in Note 48 to thestandalone Ind AS financial statements ageing and expected dates of realization offinancial assets and payment of financial liabilities other information accompanying thestandalone Ind AS financial statements our knowledge of the Board of Directors andmanagement plans and based on our examination of the evidence supporting the assumptionsnothing has come to our attention which causes us to believe that any materialuncertainty exists as on the date of the audit report that Company is not capable ofmeeting its liabilities existing at the date of balance sheet as and when they fall duewithin a period of one year from the balance sheet date.

We however state that this is not an assurance as to the futureviability of the Company. We further state that our reporting is based on the facts up tothe date of the audit report and we neither give any guarantee nor any assurance that allliabilities falling due within a period of one year from the balance sheet date will getdischarged by the Company as and when they fall due.

(xx) (a) In respect of other than ongoing projects there are nounspent amounts that are required to be transferred to a fund specified in Schedule VII ofthe Act in compliance with second proviso to sub section 5 of section 135 of the Act.This matter has been disclosed in note 52 to the standalone Ind AS financial statements.

(b) There are no unspent amounts in respect of ongoing projects thatare required to be transferred to a special account in compliance of provision of subsection (6) of section 135 of the Act. This matter has been disclosed in note 52 to thestandalone Ind AS financial statements.

(xxi) There are no qualifications or adverse remarks by the respectiveauditors in the Companies (Auditors Report) Order (CARO) reports of the companies includedin the consolidated Ind AS financial statements. Accordingly the requirement to report onclause 3(xxi) of the Order is not applicable to the Holding Company.

Annexure 2 to the Independent Auditor's Report of even date on theStandalone Ind AS Financial Statements of Centum Electronics Limited

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

We have audited the internal financial controls with reference tostandalone Ind AS financial statements of Centum Electronics Limited ("theCompany") as of March 31 2022 in conjunction with our audit of the standalone Ind ASfinancial 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 andmaintaining 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 ("Guidance Note") issued by the Institute of CharteredAccountants of India ("ICAI"). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to the Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to these standalone Ind AS financial statements based onour audit. We conducted our audit in accordance with the Guidance Note and the Standardson Auditing as specified under section 143(10) of the Act to the extent applicable to anaudit of internal financial controls both issued by ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to these standalone Ind AS financial statements was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to these standalone Ind ASfinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone Ind AS financial statements included obtaining anunderstanding of internal financial controls with reference to these standalone Ind ASfinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the standalone Ind AS financialstatements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to these standalone Ind AS financial statements.

Meaning of Internal Financial Controls with Reference to theseStandalone Ind AS Financial Statements

A company's internal financial controls with reference to standaloneInd AS financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of standalone Ind ASfinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial controls with reference tostandalone Ind AS financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofstandalone Ind AS financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorised acquisitionuse or disposition of the company's assets that could have a material effect on thestandalone Ind AS financial statements.

Inherent Limitations of Internal Financial Controls with Reference tothese Standalone Ind AS Financial Statements

Because of the inherent limitations of internal financial controls withreference to standalone Ind AS financial statements including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of theinternal financial controls with reference to standalone Ind AS financial statements tofuture periods are subject to the risk that the internal financial control with referenceto standalone Ind AS financial statements may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone Ind AS financial statements andsuch internal financial controls with reference to standalone Ind AS financial statementswere operating effectively as at March 31 2022 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note issued by the ICAI.

For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Sandeep Karnani
Partner
Membership Number: 061207
UDIN: 22061207AJNPRQ5015
Place of Signature: Bengaluru
Date: May 24 2022

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