Report on the Audit of the Standalone Financial Statements
To the Members of
M/s. Kavveri Telecom Products Limited
We have audited the accompanying standalone financial statements of M/s. KavveriTelecom Products Limited ("the Company") which comprise the Balance Sheetas at March 31 2021 the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Statement of Cash Flows for the yearended on that date and a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the standalone financialstatements").
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph the aforesaid Ind AS standalone Financial Statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India including the IndAS of the financial position of the Company as at 31st March 2021 and its financialperformance including other comprehensive income its cash flows and changes in equity forthe year ended on that date
Basis for Qualified Opinion
i. Material uncertainty related to Going Concern: During the year the companyhas incurred a Net Loss of Rs. 1626.15 Lakhs resulting into accumulated losses of Rs.10487.78 Lakhs (Retained earnings). The Company has obligations towards fund basedborrowings from banks aggregating to Rs. 19389.83 Lakhs. There is significant decrease inrevenue over the past few years. These conditions indicate the existence of a materialuncertainty that may cast significant doubt on the Company's ability to continue as goingconcern and therefore may be unable to realize its assets and discharge its liabilities inthe normal course of business. The ultimate outcome of these matters is at present notascertainable. Accordingly we are unable to comment on the consequential impact if anyon the accompanying standalone financial statements.
ii. In relation to carrying value of investments held in by the company to itssubsidiaries which have been incurring losses and in some of these companies net worthwas fully or substantially eroded. Taking into account the management internal assessmentand initiatives to be implemented to improve the profitability in the medium to long termthe management of the company is of the view that carrying value of investments arerealizable at the value stated in the books. In the absence of fair valuation of theseinvestments we are unable to comment upon the carrying value and thus we are unable tocomment whether any provision for impairment in the value of investments is required. iii.The Company has defaulted in repayment of dues to Banks for the year ended 31st
March 2021. All the loans outstanding were classified as NPA by the Banks. The balanceoutstanding as at 31.03.2021 is Rs. 19389.83 Lakhs (Including Principal and InterestProvisions on the loans but excluding Penal Interest if any) as per books of account. Inthe absence of confirmation of balances from banks we are unable to ascertain the actualdues to Banks as at 31.03.2021.
iv. In the absence of proof of physical verification of inventories during the year bythe management we are unable to comment on the discrepancies if any between the bookrecords and physical stocks of inventories (Value of inventories as per books of accountas at 31.03.2021 is Rs.5609.63 Lakhs).
v. In the absence of proof of physical verification of Property Plant and
Equipment during the year by the management we are unable to comment on thediscrepancies if any between the book records and physical stocks (Net Block of PPE ofRs.631.14 lakhs as per books of account as at 31.03.2021).
vi. The Company has long pending undisputed statutory dues towards ESI PF &
TDS (Net Payable of Rs.161.41 Lakhs as per books of account as at 31.03.2021)
vii. In the absence of confirmations of Trade Receivables and various advances we areunable to comment on the extent to which such balances are recoverable.
viii. In the absence of confirmations of Trade Payables and variousadvances/borrowings we are unable to comment on the extent to which such balances arepayable.
ix. The company recognised deferred tax assets on account of carried forward unused taxlosses and other taxable temporary differences aggregating to Rs. 1984.44 Lakhs as on31.03.2021. The management of the company is confident that sufficient future taxableincome will be available against which such deferred tax assets would get adjusted.However in our opinion in absence of convincing evidence that sufficient future taxableincome will be available against which such deferred tax assets would get adjusted suchrecognition is not in accordance with Indian Accounting Standard 12 "IncomeTaxes" (Ind AS 12).
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013 (the Act). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the financial Statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter Paragraph
The COVID -19 has impacted the financial performance and operating environmentof "the Company" in financial year 2020-21. Though the pandemic is not expectedto have any significant impact on the financial performance and operating environment ofthe Company in financial year 2021-22 the situation is still remains uncertain. TheCompany will continue to closely monitor any material changes to future economicconditions on account of COVID-19.
Our opinion is not modified in respect of this matter. Key Audit Matters
Key audit matters are those matters that in our professional judgment were of 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.
Management's Responsibility for the Standalone 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 and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the accounting Standards specified undersection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statement that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
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.
Those Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial 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. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone 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 assessthe risks of material misstatement of the standalone financial statements whether due tofraud or error design and perform audit procedures responsive to those risks and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. Therisk of not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control. Obtain an understanding ofinternal financial controls relevant to the audit in order to design audit Procedures thatis appropriate in the circumstances. Under section 143(3)(i) of the Act we are alsoresponsible for expressing our opinion on whether the Company has adequate internalfinancial controls system 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 exists;we are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually 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 Statements 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 with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters Specified in paragraphs 3and 4 of the Order.
2. As required by Section 143(3) of the Act based on our audit we report that: i) Wehave sought and obtained except for the possible effects of the matters described in theBasis for Qualified Opinion paragraph above all the information and explanations which tothe best of our knowledge and belief were necessary for the purposes of our audit. ii)Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph above 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. iii)The Balance Sheet the Statement of Profit and Loss including Other Comprehensive IncomeStatement of Changes in Equity and the Statement of Cash Flow dealt with by this Reportare in agreement with the relevant books of account. iv) Except for the possibleeffects of the matters described in the Basis for Qualified Opinion paragraph above inour opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. v) 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. vi) With respect to the adequacy of the internalfinancial controls over financial reporting of the Company and the operating effectivenessof such controls refer to our separate Report in "Annexure B". Our reportexpresses a modified opinion on the adequacy and operating effectiveness of the Company'sinternal financial controls over financial reporting.
vii)With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended. In ouropinion and to the best of our information and according to the explanations given to usthe company has not paid/provided any managerial remuneration during the year under Audit.viii) 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements.
The Company has not made provision as required under the applicable law oraccounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts.
There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
|For P. Murali &Co. |
|Chartered Accountants |
|Firm Registration No: 007257S |
|P. Murali Mohana Rao |
|M.No. 023412 |
|UDIN: 21023412AAAALP9491 |
|Place: Hyderabad |
|Date: 30.06.2021 |
Annexure A to the Auditors Report
Annexure referred to in Independent Auditors Report to the Members of Kavveri TelecomProducts Limited on the Standalone Ind AS Financial Statements for the year ended 31stMarch 2021 we report that:
i. (a)The Company has not produced Fixed Assets Register. Hence we are unable toascertain the details of quantity and situation of Property Plant and Equipment.
(b) Fixed assets have not been physically verified during the year by the Management inaccordance with a regular program of verification. We are unable to comment ondiscrepancies that might be arose on such physical verification of fixed assets that arelying on all locations where physical verification could not be performed.
(c) According to the information and explanations given to us and on the basis of ourexamination of records of the Company the title deeds of immovable properties are held inthe name of the Company as at the Balance Sheet date.
ii. According to the information and explanations given to us physical verification ofinventory has not been conducted at reasonable intervals by the management. We are unableto comment on the discrepancies that may arise on the physical verification of inventoriesthat are lying on locations where physical verification could not be performed.
iii. The Company has not granted any loans secured or unsecured to companies firmsand Limited Liability partnerships or other parties covered in the register maintainedunder section 189 of the Companies Act 2013
iv. In our opinion and according to the information and explanations given to us thecompany in respect of loans investments guarantees and security provisions of section185 and 186 of companies act 2013 have been complied with.
v. The Company has not accepted any deposits from the public covered under Section 73to 76 of the Companies Act 2013 and rules framed there under to the extent notified.
vi. Pursuant to the rules made by the Central Government of India the Company is notrequired to maintain cost records as specified under Section 148(1) of the Companies Act2013.
vii. (a) According to the information and explanations given to us and based on therecords of the company examined by us the company is not regular in depositing theundisputed statutory dues including Provident Fund TDS ESI and GST as applicable withthe appropriate authorities;
(b) There were disputed amounts payable in respect of Provident Fund Professional Taxand TDS dues in arrears as at 31st March 2021 for a period of more than 6 months from thedate they became payable:
|Nature of Due ||Amount in Rs. |
|Provident Fund Payable ||146625 |
|Professional Tax Payable ||31750 |
|TDS Payable ||15994223 |
(c) Details of dues of Income-tax Sales Tax Service Tax Customs Duty Excise DutyValue Added Tax and CESS which have not been deposited as on March 31 2021 on account ofdisputes are given below:
|Direct Tax: Name of the Statue ||Nature of Dues ||Amount in Rs. (Lakhs) ||Period to which amount ||Forum where dispute pending |
|Income Tax Act 1961 ||Income Tax ||19.09 ||A.Y 2005-06 ||CIT (A) Bangalore |
|Income Tax Act 1961 ||Income Tax ||133.37 ||A.Y 2006-07 ||CIT (A) Bangalore |
|Income Tax Act 1961 ||Income Tax ||826.14 ||A.Y 2008-09 ||CIT (A) Bangalore |
|Income Tax Act 1961 ||Income Tax ||430.80 ||A.Y 2009-10 ||CIT (A) Bangalore |
|Income Tax Act 1961 ||Income Tax ||346.85 ||A.Y 2010-11 ||CIT (A) Bangalore |
|Income Tax Act 1961 ||Income Tax ||5474.02 ||A.Y 2011-12 ||CIT (A) Bangalore |
|Income Tax Act 1961 ||Income Tax ||4677.90 ||A.Y 2012-13 ||CIT (A) Bangalore |
|Income Tax Act 1961 ||Income Tax ||NIL ||A.Y 2013-14 ||CIT (A) Bangalore |
|Income Tax Act 1961 ||Income Tax ||607.58 ||A.Y 2014-15 ||CIT (A) Bangalore |
|Income Tax Act 1961 ||Income Tax ||584.85 ||A.Y 2015-16 ||CIT (A) Bangalore |
|Income Tax Act 1961 ||Income Tax ||8624.55 ||A.Y 2017-18 ||CIT (A) Bangalore |
|Name of the Statute ||Nature of dues ||Amount in Rs. (In Lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Central Excise ||Availment of Cenvat Credit (Including Penalty) ||5424.26 ||February 2007 to 2009 ||CESTAT Bangalore |
|Central Excise ||Irregular availiment of Cenvat Credit( Including penalty) ||33.2 ||2010-2011 ||Commissioner of customs and central excise (Appeals) Bangalore |
|Central Excise ||Irregular availment of Cenvat Credit(Including penalty) ||1.27 ||2012-2013 ||CESTAT Bangalore |
|Central Excise ||Irregular availment of Cenvat Credit(Including penalty) ||2.58 ||2007-2008 ||Commissioner of customs and central excise (Appeals) Bangalore |
|Central Excise ||Irregular availment of Cenvat Credit(Including penalty) ||10.36 ||2007-2008 & 2008- 2009 ||CESTAT Bangalore |
|Sales Tax ||Sales Tax Penalty and Interest ||4.56 ||2006-2007 ||Joint Commissioner of Commercial Tax (Appeal) |
|Sales Tax ||Sales tax Penalty and Interest ||13.29 ||2007-2008 ||Joint Commissioner of Commercial Tax (Appeal) |
viii. The Company has taken term loans from Banks and Financial institutions. Thecompany has defaulted in payment of dues of interest and principal. (Refer "Basis forQualified Opinion Paragraph" in Audit Report).
ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans are utilized for the purpose forwhich they are obtained.
x. According to the information and explanations given to us no material fraud by thecompany or on the company by its officers or employees has been noticed or reported duringthe course of our Audit. xi. Based upon the audit procedures performed and the informationand explanations given by the management the company has not paid/provided any managerialremuneration during the year under Audit
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are notapplicable.
xiii. As per Note no. 34 the Company has entered into transactions with relatedparties in compliance with the provisions of section 188 of the Act. The details of suchrelated party transactions have been disclosed in the Ind AS Financial Statements asrequired under Indian Accounting standard (Ind AS) 24 related party disclosures specifiedunder section 133 of the Act read with relevant rules issued there under.
xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review.
xv. The Company has not entered into non-cash transactions with its directors orpersons connected with him.
xvi. The Company is not required to be registered under section 45-IA of The Reserve
Bank of India Act 1934.
|For P. Murali & Co. |
|Chartered Accountants |
|Firm Registration No: 007257S |
|P.Murali Mohana Rao |
|Membership No. 023412 |
|UDIN: 21023412AAAALP9491 |
|Place: Hyderabad |
|Date: 30.06.2021. |
Annexure B to the Independent Auditor's Report
Report on the Internal Financial Controls over Financial Reporting under clause (i) ofthe Sub-section 3 of the Section 143 of the Companies Act 2013 (The Act')
We have audited the internal financial controls over financial reporting of M/s.Kavveri Telecom Products Limited (the company') as of 31st march 2021 inconjunction with our audit of IND AS 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 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 (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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 Act.
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 deemed to be prescribedunder section 143(10) of the Act to the extent applicable to an Audit of InternalFinancial Controls both applicable to an audit of Internal Financial Controls and bothissued by the ICAI. These standards and guidance note require that we comply with ethicalrequirements and plan and performed the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. OurAudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the Auditor's Judgment including the assessment of the risk of materialmisstatement 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 and the company's internal financial control systemover financial 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 these policies and procedures that (1) pertain to themaintenance of records that in reasonable detailed 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 Ind ASFinancial Statements in accordance with generally accepted principles and that receiptsand expenditures are being made only in accordance with authorization of management anddirectors of the Company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition use or disposition of the Company's assetsthat could have a material effect on the Ind AS Financial Statements.
Inherent Limitation of Internal Financial Controls over Financial Reporting
Because of the inherent limitation 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.
Basis for Qualified Opinion:
1. The company did not have appropriate internal controls for confirmation andreconciliation of trade receivables trade payables other current assets and currentliabilities.
2. The company did not have fixed asset register as on 31.03.2021.
As a result of above matters we have not been able to obtain sufficient andappropriate audit evidence in relation to Internal Financial Controls over FinancialReporting and consequently we are unable to determine whether the company has establishedadequate internal financial controls over Financial Reporting and also whether suchinternal financial controls were operating effectively as at March 31st 2021.
In our opinion as a result of the matters given in the Basis of Qualified opinionparagraph in the Audit report of the company we have not obtained sufficient appropriateaudit evidence in respect of those matters specified in the Basis of Qualified opinionparagraph. We are unable to determine whether the company has established adequateinternal financial controls over Financial Reporting and also whether such internalfinancial controls were operating effectively as at March 31st 2021 based on the internalcontrol over financial reporting criteria established by the company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute Of CharteredAccountants of India.
|For P. Murali & Co. |
|Chartered Accountants |
|Firm Registration No: 007257S |
|P. Murali Mohana Rao |
|Membership No. 023412 |
|UDIN: 21023412AAAALP9491 |
|Place: Hyderabad |
|Date: 30.06.2021. |