The Members of IO System Limited
Report on the Audit of the Ind AS Financial Statements
We have audited the financial statements of IO System Limited ("theCompany") which comprise the Balance Sheet as at 31st March 2021 the statement ofProfit and Loss statement of changes in equity and Statement of cash flow for the yearended and notes to the financial statements including a summary of significant accountingpolicies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at March 31 2021 and its loss 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) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandard are further described in the Auditor's Responsibilities for the Audit of theFinancial 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 provision of the Companies Act 2013 and the rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's code of Ethics. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe Financial Statements.
Emphasis of Matter
1. We draw attention to Note No. 22 of the financial statements which describes thatthe net worth of the company has been fully eroded as its carry over losses are Rs. 20.43crores as against its paid up capital of Rs 16.90 crores. During the year the company hassuffered net cash losses of Rs. 0.73 crores as against net cash profits of Rs. 3.97 croresin immediately preceding year however in view of support of financial assistance fromholding company financials have been prepared on going concern basis.
Our opinion is not modified in respect to this matter.
Other Information Board of Directors' Report
A. The Company's Board of Directors is responsible for the preparation and presentationof its Board Report which comprises various information required under section 134(3) ofthe Companies Act 2013 but does not include the financial statements and our auditor'sreport thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance/conclusion thereon.
B. In connection with our audit of the financial statements our responsibility is toread the other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement in this other information; we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance changes in equity and cash flows of the Company in accordance withthe accounting 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 financial statements 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 is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe board of directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditor's responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatements whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances but not for the purpose ofexpressing our opinion on whether the Company has adequate internal Financial controlsystems in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the Financial Statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
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 ofthe Act we give in the Annexure 1' a statement on the matters specified in theparagraph 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 andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The balance sheet the statement of profit and loss including other comprehensiveincome the cash flow statement and statement of changes in equity dealt with by thisreport are in agreement with the books of account.
d) In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards prescribed under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e) On the basis of the written representation received from the Directors as on 31stMarch 2021 taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2021 from being appointed as a Director in termsof Section 164(2) of the Act.
f) With respect to the adequate internal financial controls over financial reporting ofthe Company and the operating effectiveness of such controls refer to our separate Reportin "Annexure 2" to this report; and
g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 its financialposition except some cases as separately mentioned in Annexure A .
ii) the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses. iii) there has been no amounts which arerequired to be transferred to the Investor Education and Protection Fund by the company.
For H S GUPTA & CO. CHARTERED ACCOUNTANTS
Firm Registration No. 000326C
(CA H. S. GUPTA) PARTNER Membership No. 012834
Place: Noida Date : 30.06.2021
RE: IO System Limited (the Company')
ANNEXURE "1" RFERRED TO IN PARAGRAPH OF OUR REPORT OF EVEN DATE
The comments are in seriatim of the order:
(i) (a) The Company is maintaining proper records of its Fixed Assets showing fullparticulars including quantitative details and situation thereof.
(b) As per the information given by the management the physical verification of fixedassets was carried out at the end of the financial year. No discrepancy on suchverification noticed by the management and reported to us.
(c) As per books of accounts verified by us and according to the information andexplanations given by the management the company does not have immovable properties and assuch the sub clause is not applicable.
(ii) The company is carrying non moving inventories valuing Rs. 2.25 lacs which havebeen physically verified at the year-end by the management. A provision of Rs. 2.25 lacshad been made for diminution in value/obsolesce. No material discrepancies were noticed onsuch physical verification and reported to us.
(iii) As per the information and explanations given to us and certified by themanagement and verified from the books of account the company has not granted any loanssecured or unsecured to companies firms limited liability partnerships or other partiescovered in the register maintained in pursuance of Section 189 of the Companies Act 2013as such there are no comments on sub clauses a) b) and c).
(iv) In our opinion and according to the information and explanations given to usthere are no loans investments guarantees and securities granted in respect of whichprovisions of Section 185 and 186 of the Companies Act 2013 are applicable hence there areno comments in this regard.
(v) The Company has not accepted any deposits from the public and as such the clause isnot applicable.
(vi) To the best of our knowledge and as per information and explanations given to usby the management the central government has not prescribed maintenance of cost recordsunder section 148(1) of the Companies Act 2013 for the products/ services of the Company.
(vii) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insurance fundincome-tax sales tax service tax customs duty excise duty value added tax goods andservice tax cess and other material statutory dues applicable to it.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance fund income-tax salestax service tax duty of customs duty of excise value added tax goods and service taxcess and other material statutory dues were outstanding at the period end for a period ofmore than six months from the date they became payable.
(b) Details of dues of Sales Tax Income Tax Custom Duty Excise Duty which have notbeen deposited as on 31st March 2021 on account of disputes are attached as AnnexureA'.
(viii) The Company does not have any loan from Bank Institutions or Debenture holdersand as such clause is not applicable.
(ix) As per the information and explanations given to us by the management the Companyhas not raised any money way of initial public offer / further public offer / debtinstruments and term loans hence there are no comments in this regard.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the company and no material fraud on the company has been noticedand reported during the year.
(xi) In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V of the Act.
(xii) The clause is not applicable as the company is not a Nidhi Company'.
(xiii) Based on our audit procedures performed for the purpose of reporting the trueand fair view of the Ind AS financial statements and according to the information andexplanations given by the management transactions with the related parties are incompliance with Section 177 and 188 of Companies Act 2013 wherever applicable and thedetails have been disclosed in the notes to the Ind AS financial statements as requiredby the applicable accounting standards.
(xiv)As per the information and explanations given to us and on an overall examinationof the balance sheet the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year under reviewand as such there are no comments in this regard.
(xv) As per the information and explanations given by the management the Company hasnot entered into any non-cash transactions with directors or persons connected with him.
(xvi)As per the information and explanations given to us the provisions of Section45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.
For H S GUPTA & CO. CHARTERED ACCOUNTANTS
Firm Registration No. 000326C
(CA H. S. GUPTA) PARTNER Membership No. 012834 UDIN: 21012834AAAAAK9259
Place: Noida Date : 30.06.2021
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTSOF IO SYSTEM LIMITED
Report on the Internal Financial Controls under Clause (f) of Sub-section 3 of Section143 of the Companies Act 2013 (the Act)
To the members of IO System Limited
We have audited the internal financial controls over financial reporting of IO SystemLimited ("the Company") as of March 31 2021 in conjunction with our audit ofthe 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 internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing as specified under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India. 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 controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the Ind AS financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of Ind AS financial statements for external purposes in accordance withgenerally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of theCompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For H S GUPTA & CO.
CHARTERED ACCOUNTANTS Firm Registration No. 000326C
(CA H. S. GUPTA)
PARTNER Membership No. 012834
Place: Noida Date : 30.06.2021
List of disputed cases of Sales Tax/Income Tax/ Custom Duty/Excise Duty authority withwhom pending and the amount involved is detailed as under :-
|Name of Statute ||Assessment Year ||Nature of Dues ||Amount ||Forum Where dispue is pending |
|1 U.P.Sales Tax ||1997-98 ||Sales Tax ||116536 ||JT Commissioner of Trade TaxNoida |
|2 U.P.(Central/Local) ||1998-99 ||Sales Tax ||45254 ||JT Commissioner of Trade TaxNoida |
|3 Delhi Sales Tax ||2000-01 ||Sales Tax ||71789 ||Asstt. Comm. IX Delhi Sales Tax |
|4 Delhi Sales Tax ||2001-02 ||Sales Tax ||2572528 ||Addll. Comm. II Delhi Sales Tax |
|5 Delhi Sales Tax ||2003-04 ||Sales Tax ||1865674 ||Addll. Comm. II Delhi Sales Tax |
|6 Delhi Sales Tax ||2004-05 ||Sales Tax ||230073 ||STO Delhi sales Tax |
|7 T.N. Sales Tax ||2000-01 ||Sales Tax ||184849 ||CT III T. N.S.Tax Appeal Asstt. Comm. |
|8 T.N. Sales Tax ||2002-03 ||Sales Tax ||140111 ||CT III T. N.S.Tax Appeal Asstt. Comm. |
|9 West Bengal Sales Tax ||1999-2000 ||Sales Tax ||288098 ||Asstt. Comm. South circle Directorate of Commercial West Bengal |
|10 West Bengal Sales Tax ||2000-01 ||Sales Tax ||90650 ||Asstt. Comm. South circle Directorate of Commercial West Bengal |
|11 West Bengal Sales Tax ||2002-03 ||Sales Tax ||1011106 ||Asstt. Comm. South circle Directorate of Commercial West Bengal |
|12 Central Excise Act ||1999-01 ||Interest and penalty ||69969 ||CEGAT New Delhi |
|13 Central Excise Act ||2002-03 ||Interest and penalty ||19427 ||CEGAT New Delhi |
|14 Central Excise Act ||valuation case ||Excise Duty ||1509876 ||CEGAT New Delhi |