To the Members of
Elnet Technologies Limited
Report on the Audit of the Financial Statements
We have audited the financial statements of Elnet Technologies Limited("the Company") which comprise the Balance Sheet as at March 31 2021 and thestatement of Profit and Loss statement of changes in equity and statement of Cash Flowsfor the year then ended and notes to the financial statements including a summary ofsignificant 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 financial statements give the information requiredby the Companies Act 2013("the Act') in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with Companies (Indian Accounting Standards) Rules 2015 as amendedand other accounting principles generally accepted in India of the state of affairs ofthe Company as at March 31 2021 and profit changes in equity and its cash flows for theyear 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 Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial 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 opinion.
Emphasis of Matter
We draw attention to Note 42 to the financial statements which statesthat the management has made an assessment of the impact of COVID-19 on the Company'soperations financial performance and position as at and for the year ended March 31 2021and has concluded that no there is no impact which is required to be recognised in thefinancial statements. Accordingly no adjustments have been made to the financialstatements.
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 financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
Recognition Valuation and Presentation of provision and contingentliabilities:
Refer Note 35 to financial statement for the year ended 31st March 2021for the following:
a) The claims made by Electronics Corporation of Tamilnadu Limited(ELCOT) against the Company towards interest on delayed payments of lease rent relating tothe years 2009-10 and 2017-18 have been disclosed as Contingent Liability by the Companywhich amounts to Rs 1071 Lakhs.
b) The company has received a service tax demand from AdditionalCommissioner of GST and Central Excise for Rs. 136.59 Lakhs on considering reimbursementof electricity charges as taxable charges for period October 2015 to June 2017.
Since there is potential exposure to the Company on the abovecontingent liabilities the assessment of the probability of occurrence outflow if anyand adequate disclosure requirements involves significant judgement by the management.
Due to the level of judgement relating to recognition valuation andpresentation of provision and contingent liabilities this is considered to be a key auditmatter.
How the Key Audit Matter was addressed in our audit
Our audit procedure in respect of this area included:
Reviewed the process and control followed by the Company foridentification and developments in monitoring of significant relation to the litigationsincluding completeness thereof.
Reviewed the process of valuation implemented by the management for thesaid claims through discussion with legal and finance departments of the Company anddiscussed the status of ongoing and potential legal matters.
Evaluated the management's assessment about the outcome of thedispute.
Reviewed the legal opinion obtained third party correspondence andreports with respect to the matters.
Assessed the reasonableness of management's judgement w.r.t tolikelihood of outflow.
Assessed the adequacy of the disclosures made in the notes to financialstatement.
Information Other than the Financial Statements and Auditor'sReport Thereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Managementreport Chairman's statement Director's report etc but does not includethe financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of Management and Those Charged with Governance forthe Financial Statements
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these financialstatements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statement that give a true and fair view andare free from material misstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors 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 the Board of Directors either intends to liquidate the Companyor to cease operations 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 FinancialStatements
Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
We give in "Annexure A" a detailed description ofAuditor's responsibilities for Audit of the Financial Statements.
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 Act we give in "Annexure B" a statement on thematters 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 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 the Statementof Changes in
Equity and the Statement of Cash Flow dealt with by this Report are inagreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(e) On the basis of the written representations received from thedirectors as on March 31 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2021 from being appointed as a director in termsof Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controlswith reference to financial statements of the Company and the operating effectiveness ofsuch controls refer to our separate Report in "Annexure C".
(g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 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 financial statements Refer Note 35 to the financial statements;
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses. iii. There hasbeen no delay in transferring amounts required to be transferred to the InvestorEducation and Protection Fund by the Company
3. As required by The Companies (Amendment) Act 2017 in our opinionaccording to information explanations given to us the remuneration paid by the Companyto its directors is within the limits laid prescribed under Section 197 of the Act and therules thereunder.
|For MSKA & Associates |
|Chartered Accountants |
|ICAI Firm Registration No. 105047W |
|Geetha Jeyakumar |
|Membership No. 029409 |
|UDIN: 21029409AAAAFB1040 |
|Place: Chennai |
|Date: June 23 2021 |
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THEFINANCIAL STATEMENTS OF ELNET TECHNOLOGIES LIMITED
Auditor's Responsibilities for the Audit of the 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 the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient The risk of not detecting amaterial misstatement resulting from fraud is higher than for one resulting from error asfraud may involve collusion forgery intentional omissions misrepresentations or theoverride of internal control.
Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether thecompany has internal financial controls with reference to financial statements in placeand 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 financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause theCompany to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the significant audit findingsincluding any significant and deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
ANNEXURE B TO INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THEFINANCIAL STATEMENTS OF ELNET TECHNOLOGIES LIMITED FOR THE YEAR ENDED MARCH 31 2021
[Referred to in paragraph 1 under Report on Other Legal andRegulatory Requirements' in the Independent Auditors' Report]
i. (a) The company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets (Property Plantand Equipment).
(b) All the fixed assets (Property Plant and Equipment) have not beenphysically verified by the management 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) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company.
ii. The Company is involved in the business of rendering services.Accordingly the provisions stated in paragraph 3(ii) of the Order are not applicable tothe Company.
iii. The Company has not granted any loans secured or unsecured toCompanies Firms Limited Liability Partnerships (LLP) or other parties covered in theregister maintained under section 189 of the Companies Act 2013 (the Act').Accordingly the provisions stated in paragraph 3 (iii) (a) to (c) of the Order are notapplicable to the Company.
iv. In our opinion and according to the information and explanationsgiven to us the Company has not either directly or indirectly granted any loan to any ofits directors or to any other person in whom the director is interested in accordancewith the provisions of section 185 of the Act and the Company has not made investmentsthrough more than two layers of investment companies in accordance with the provisions ofsection 186 of the Act. Accordingly provisions stated in paragraph 3(iv) of the Order arenot applicable to the Company.
v. In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits from the public within the meaningof Sections 73 74 75 and 76 of the Act and the rules framed there under.
vi. The provisions of sub-section (1) of section 148 of the Act are notapplicable to the
Company as the Central Government of India has not specified themaintenance of cost records for any of the products of the Company. Accordingly theprovisions stated in paragraph 3 (vi) of the Order are not applicable to the Company.
vii. (a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is regular indepositing with appropriate authorities undisputed statutory dues including providentfund employees' state insurance income-tax goods and service tax cess and anyother statutory dues applicable to it.
(b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome-tax goods and service tax cess and other statutory dues were outstanding at theyear end for a period of more than six months from the date they became payable.
(c) According to the information and explanation given to us and therecords of the Company examined by us there are no dues of income tax goods and servicetax cess and any other statutory dues which have not been deposited on account of anydispute.
viii. The Company does not have any loans or borrowings from anyfinancial institution banks government or debenture holders during the year.Accordingly the provision stated in paragraph 3(viii) of the Order is not applicable tothe Company.
ix. The Company did not raise any money by way of initial public offeror further public offer (including debt instruments) and term loans during the year.Accordingly the provisions stated in paragraph 3 (ix) of the Order are not applicable tothe Company.
x. During the course of our audit examination of the books and recordsof the Company carried out in accordance with the generally accepted auditing practicesin India and according to the information and explanations given to us we have neithercome across any instance of material fraud by the Company or on the Company by itsofficers or employees.
xi. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has paid or provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi Company. Accordingly the provisions stated inparagraph 3(xii) of the Order are not applicable to the Company.
xiii. According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.
xiv. According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly the provisions stated in paragraph 3 (xiv) of theOrder are not applicable to the Company.
xv. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordinglyprovisions stated in paragraph 3(xv) of the Order are not applicable to the Company.
xvi. In our opinion the Company is not required to be registered undersection 45 IA of the Reserve Bank of India Act 1934 and accordingly the provisionsstated in paragraph clause 3 (xvi) of the Order are not applicable to the Company.
ANNEXURE C TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THEFINANCIAL STATEMENTS OF ELNET TECHNOLOGIES LIMITED
[Referred to in paragraph 2(f) under Report on Other Legal andRegulatory Requirements' in the Independent Auditors' Report]
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 tofinancial statements of Technologies Limited ("the Company") as of March 312021 in conjunction with our audit of the financial statements of the Company for the yearended on that date.
Management's Responsibility for Internal Financial Controls
The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal control 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 issued by the Institute of Chartered Accountants ofIndia (ICAI) (the "Guidance Note"). 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 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 the Act.
Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingissued by ICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether internal financial controls with reference tofinancial statements was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our of internal financial controls with reference to financial statementsincluded obtaining an understanding of internal financial controls with reference tofinancial 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 includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.
THIRTIETH ANNUAL REPORT 2020 - 21
sufficient and appropriate to provide We believe that the auditevidence we have obtained is a basis for our audit opinion on the Company's internalfinancial controls with reference to financial statements.
Meaning of Internal Financial Controls With Reference to FinancialStatements
A Company's internal financial control with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A Company's internalfinancial control with reference to financial statements includes those policies andprocedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls With Reference toFinancial Statements
Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial control with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.
In our opinion the Company has in all material respects internalfinancial controls with reference to financial statements and such internal financialcontrols with reference to financial statements were operating effectively as at March 312021 based on the internal control with reference to financial statements criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note.
|For MSKA & Associates |
|Chartered Accountants |
|ICAI Firm Registration No. 105047W |
|Geetha Jeyakumar |
|Partner Membership No. 029409 |
|UDIN: 21029409AAAAFB1040 |
|Place: Chennai |
|Date: June 23 2021 |