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Kapston Facilities Management Ltd.

BSE: 535064 Sector: Others
NSE: KAPSTON ISIN Code: INE542Z01010
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Kapston Facilities Management Ltd. (KAPSTON) - Auditors Report

Company auditors report

TO THE MEMBERS OF KAPSTON FACILITIES MANAGEMENT LIMITED

Report on the Audit of the Financial Statements Opinion

We have audited the accompanying financial statements of KAPSTON FACILITIESMANAGEMENT LIMITED ("the Company") which comprise the Balance Sheet as atMarch 31 2020 the Statement of Profit and Loss and the Statement of Cash Flows for theyear ended on that date and a summary of the significant accounting policies and otherexplanatory 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 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2020 the profit and total comprehensiveincome and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the

Auditor's Responsibilities for the Audit of the Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules made there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.

KEY AUDIT MATTER RESPONSE TO KEY AUDIT MATTER
Trade Receivables Principal Audit Procedures
Trade receivables as indicated in Note No 12 comprise a significant portion of the total assets of the Company and serve as security for a majority of the Company's short-term debt. Total debtors constitute 54.59% of the total assets of the company and the outstanding trade receivable are about 110 days of the total revenue. Our audit approach was a combination of test of internal controls and substantive procedures which included the following:
Evaluate and test the controls for managing trade receivables like credit limits and subsequent recovery
Assessing the recoverability of long outstandings
Evaluation of status of disputes and possibility of recovery
Accordingly the value of receivables comprises a significant portion of the total assets of the company therefore it is considered a key audit matter. Seek independent confirmations and apply alternate audit procedures in case of non replies.
Conclusion
Our procedures did not identify any material exceptions.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report andShareholder's

Information but does not include the financial statements and our auditor's reportthere on.

The provisions related to Corporate Governance was not applicable to the Company forthe Financial year ended March 312020 as the Company was listed on NSE Emerge (SMEPlatform of National Stock Exchange) the Company got migrated to main board of NationalStock Exchange of India and the said provisions will apply from the current financial year2020-21. Our opinion on the financial statements does not cover the other information andwe do not express any form of assurance conclusion there on.

In connection with our audit of the financial statements our responsibility is to readthe 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 of 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 Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards referred to in Section 133of Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014.Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding 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; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative 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 responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal control relevant to the Company's preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the Accounting estimates made by management aswell as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also: Identify and assess therisks of material misstatement of the financial statements whether due to fraud or errordesign and perform audit procedures responsive to those risks and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than foroneresultingfromerrorasfraudmayinvolvecollusion forgery intentional omissionsmisrepresentations or he override of internal control.

Obtain an understanding of internal financial controls relevant to the audit in orderto 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 adequate internal financial controls system in place and the operatingeffectiveness 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. From the matters communicated withthose charged with governance we determine those matters that were of significance in theaudit of the financial statements of the current period and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 issued by thedepartment of Company affairs in terms of section 143 (11) of the Companies Act 2013and on the basis of our examination of the books and records as we considered appropriateand according to the information and explanation given to us we give in the"Annexure B" a statement on the matters specified in paragraph 3 and 4 of theOrder to the extent applicable.

2. As required by section 143(3) of the Companies Act 2013 we report that: a) We havesought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit. b) In our opinion properbooks of account as requiredbylawhavebeenkeptbytheCompany so far as appears from ourexamination of those books. c) The Balance Sheet and Statement of Profit and Loss and Cashflow Statement dealt with by this Report are in agreement with the books of account. d) Inour opinion the aforesaid financials comply with the Accounting Standards specified underof Section 133 of the Companies Act 2013 read with Rule 7 of the Companies (Accounts)Rules 2014. e) On the basis of written representations received from the directors as onMarch 31

2020 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2020 from being appointed as a director in terms of subsection (2) of section 164 of the Companies Act 2013. f) with respect to the adequacy ofthe internal financial controls over financial reporting of the Company and the operatingeffectiveness of such controls refer to our separate report in "Annexure A";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) Thereare no pending litigations for or against the Company which would impact its financialposition.

ii) The Company does not have any derivatives contracts. Further there are no long termcontracts for which provisions for any material foreseeable losses is required to be made.iii) There are no amounts pending that are required to be transferred to InvestorEducation and Protection Fund.

Chartered Accountants
(FRN No.008801S/S200060)
Sd/-
R Srinivasu
Partner
Date: 15/06/2020 M.No:224033
Place: Hyderabad. UDIN: 20224033AAAAGC6106

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of KAPSTON FACILITIES MANAGEMENTLIMITED of even date)

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

We have audited the internal financial controls over financial reporting of KAPSTONFACILITIES MANAGEMENT LIMITED ("the Company") as of March 31 2020 inconjunction with our audit of the financial statements of the Company for the year endedon that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively 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 judgment including the assessment of the risks ofmaterial misstatement of the 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 of the Company.

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 financial statement for external purpose in accordance with generallyaccepted accounting principles. A company's internal financial controls over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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.

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.

Opinion:

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 2020 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 NSVR & ASSOCIATES LLP.
Chartered Accountants
(FRN No.008801S/S200060)
Sd/-
R Srinivasu
Partner
Date: 15/06/2020 M.No:224033
Place: Hyderabad. UDIN: 20224033AAAAGC6106

ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of KAPSTON FACILITIES MANAGEMENTLIMITED of even date) i. In respect of the Company's fixed assets: (a) The Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets.

(b) The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year. According to the information andexplanations given to us no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds / registered sale deed Provided tous we report that the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the Company as at the balance sheetdate. ii. a) As explained to us the physical verification of inventories excludingstocks lying with third parties have been conducted at reasonable intervals by theManagement during the year. In case of inventories lying with third parties certificatesof stocks holding have been received. b) In our opinion and according to the informationand explanation given to us the procedures of physical verification of inventoriesfollowed by the Management were reasonable and adequate in relation to the size of theCompany and the nature of its business. c) In our opinion and according to the informationand explanations given to us the Company has maintained proper records of its inventoriesand no material discrepancies were noticed on physical verification of stocks as comparedto book records. iii. The Company has not granted any loans secured or unsecured tocompanies firms or other Parties covered in the register maintained under section 189 ofthe Companies Act. Thus Clause 3(iii) of the Order is not applicable. iv. In our opinionand according to the information and explanations given to us the Company has compliedwith the provisions of Sections 185 and 186 of the Act in respect of grant of loansmaking investments and providing guarantees and securities as applicable. v. The Companyhas not accepted any deposits from the public and hence the directives issued by theReserve Bank of India and the provisions of Sections 73 to 76 or any other relevantprovisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 with regard tothe deposits accepted from the public are not applicable vi. As informed to us themaintenance of Cost Records has not been specified by the Central Government undersub-section (1) of Section 148 of the Act in respect of the activities carried on by thecompany. vii. According to the information and explanations given to us in respect ofstatutory dues: (a) The Company has generally been regular in depositing undisputedstatutory dues including Provident Fund Employees' State Insurance Income Tax Goodsand Service Tax Customs Duty Cess and other material statutory dues applicable to itwith the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Goods and Service Tax Customs Duty Cess and other materialstatutory dues in arrears as at March 31 2020 for a period of more than six months fromthe date they became payable. viii. Based on our Audit procedures and on the informationand explanations given by the management we are of the opinion that the company has notdefaulted in repayment of dues to a financial institutions banks or debenture holders.ix. Money raised by way of term loan were applied for the purpose for which it was raised.The Company has not raised moneys by way of initial public offer or further public offer.

x. To the best of our knowledge and according to the information and explanations givento us no fraud by the Company or no material fraud on the Company by its officers oremployees has been noticed or reported during the year. xi. Based upon the auditprocedures performed and the information and explanations given by the management themanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule V to the CompaniesAct. xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) ofthe Order is not applicable to the Company. xiii. In our opinion and according to theinformation and explanations given to us the Company is in compliance with Section 177and 188 of the Companies Act 2013 where applicable for all transactions with the relatedparties and the details of related party transactions have been disclosed in the financialstatements as required by the applicable accounting standards.

xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3 (xiv) of the Order is not applicable to the Company. xv. In our opinion andaccording to the information and explanations given to us during the year the Company hasnot entered into any non-cash transactions with its Directors or persons connected to itsdirectors and hence provisions of section 192 of the Companies Act 2013 are notapplicable to the Company. xvi. The Company is not required to be registered under section45-IA of the Reserve Bank of India Act 1934.

For NSVR & ASSOCIATES LLP.
Chartered Accountants
(FRN No.008801S/S200060)
Sd/-
R Srinivasu
Partner
Date: 15/06/2020 M.No:224033
Place: Hyderabad. UDIN: 20224033AAAAGC6106

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