Kernex Microsystems (India) Limited
We have audited the standalone Financial statements of Kernex Microsystems (India)Limited ("the Company") which comprise the balance sheet as at 31March 2019and the statement of Profit and Loss including the Statement of Other ComprehensiveIncome the statement of cash flows and the statement of changes in equity for the yearthen ended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Financial statements give the information requiredby the Companies Act 2013 as amended ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2019 and its loss andits cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of standalone Financial statements in accordance with theStandards on Auditing (Sas) as specified under section 143(10) of the Companies Act2013. Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial statementssection of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the standalone Financial statements under the provisionsof the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion on the standalone Financial statements.
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises Statutory reports corporate governance reports and Boards Reportincluded in the annual report but does not include the standalone Financial statements andour auditor's report thereon which we obtain prior to the date of auditor's report.
Our opinion on the standalone Financial statements does not cover the other informationand we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone Financial statements our responsibilityis to read the other information identified above and in doing so consider whether suchother information is materially inconsistent with the standalone Financial statements orour knowledge obtained in the 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.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 standalone Financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in the equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards(Ind AS) specifiedunder section 133 of the Act read with the companies (Indian Accounting Standards) Rules2015 as amended. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Standalone Financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the Standalone Financial statements the management 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.
Those Board of Directors are 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 financialstatements as a whole are free from material misstatement 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 standalone Financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism 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 and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentionalomissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(I)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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 Companies Act 2013 we give in the Annexure a statement on the matters specified inparagraphs 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 explanations which to the bestof our knowledge and belief were necessary for the purposes 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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account
d) In our opinion the aforesaid standalone 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 the directors as on31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31March 2019 from being appointed as a director in terms of Section164(2) of the Act.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".
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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements.
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 delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
|For PRSV & Co. LLP |
|Chartered Accountants |
|Firm Registration No: S-200016 |
|Y. Venkateswarlu |
|Membership No: 222068 |
|PLACE : Hyderabad |
|DATE : 20th May 2019 |
ANNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Kernex Microsystems (India) Limitedof 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 KernexMicrosystems (India) LIMITED ("the Company") as of 31 March 2019 inconjunction with our audit of the standalone Financial statements of the Company for theyear ended on 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 we re operating effectively for ensuring the orderly and efficientconduct of its business the safe guarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act2013.
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 judgement 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 Company's internal financial controls 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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control 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 authorizations ofmanagement and directors of the company; and (3) Provide reasonable assurance regardingprevention or timely detection of unauthorized 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 be come inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the
Company has in all material respects an adequate internal financial controls systemover financial reporting and such internal financial controls over financial reportingwere operating effectively as at 31 March 2019 based on the internal control overfinancial reporting 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.
|For PRSV & Co. LLP |
|Chartered Accountants |
|Firm Registration No: S-200016 |
|Y. Venkateswarlu |
|Membership No: 222068 |
|Place: Hyderabad |
|Date: 20th May 2019 |
ANNEXURE B' TO THE INDEPENDENT AUDITORS' REPORT
((Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Kernex Microsystems (India) Limitedof evendate)
i. In respect of the Company's fixed assets: (a) The Company has maintained properrecords showing full particulars including quantitative details and situation of fixedassets.
(b) The Company has a regular program of verification to cover all the items of fixedassets in a phased manner which in our opinion is reasonable having regard to the sizeof the Company and the nature of its assets. No physical verification of assets has beencarried out during the year under Audit.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the company.
ii. As explained to us the management has conducted physical verification of inventoryat reasonable intervals during the year and no material discrepancies were observed in theinventories.
iii. According to the information and explanations given to us the Company has notgranted any unsecured loans to companies firms limited liability partnerships or otherparties covered in the register maintained under section 189 of the Companies Act 2013Accordingly the provisions of clause 3 (iii) (b) (c) and (d) are not applicable to theCompany
iv. In our opinion and according to the information and explanations given to us theCompany has not advanced loans to director/ to a Company in which the Director isinterested to which provisions of section 185 of the Companies Act 2013 apply. In ouropinion and according to the information and explanations given to us the Company hasmade investments and given guarantees/provided security which is in compliance with theprovisions of Sections 186 of the Companies Act 2013.
v. The Company has not accepted deposits during the year within the meaning of Sections73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Therefore the provisions of the clause 3 (v) of the Order are not applicable to theCompany.
vi. The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Companies Act 2013 for the business activities carried out bythe Company. Thus reporting under clause 3(vi) of the order is not applicable to theCompany.
vii. (a) According to the books and records as produced and examined by management inaccordance with Generally Accepted Auditing Practices in India and also based onmanagement representations undisputed statutory dues in respect of Provident fundEmployees' State Insurance Income Tax Sales Tax Service Tax Value Added Tax Goods andService Tax Customs Duty Excise Duty Cess other material statutory dues applicable toit with the appropriate authorities.
| ||Amount |
|Nature of Statutory Dues || |
| ||(Rs. In Lakhs) |
|Service tax ||69.72 |
|CST against C' Forms ||22.07 |
|Total ||91.80 |
(b) According to the information and explanations given to us disputed amounts payablein respect of income-tax were outstanding as at March 31 2019 as follows :
|Name of the Statute || || ||Period to which the amount relates ||Amount Rs. in Lakhs |
|The Income Tax Act 1961 ||Income Tax ||High Court of judicature at Hyderabad for the state of Telangana and state of Andhra Pradesh ||A.Y. 1998-99 ||8.00 |
viii. In our Opinion and according to the information and explanations given by themanagement the company has not defaulted in repayment of loans or borrowings to banks orgovernment. There are no dues which are payable to financial institutions. The Company didnot have any debenture holders during the year.
ix. According to information and explanation given by management the Company has notraised any moneys by way of initial public offer/further public offer/ debt instrumentsand term loans and hence reporting under clause 3(ix) of the Order is not applicable tothe Company.
x. Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no material fraud onthe Company by its officers or employees has been noticed or 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 to the Act.
xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theOrder is not applicable to the Company.
xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting 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 and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and hence provisions of section 192 of theCompanies Act 2013 are not applicable to the Company.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934 as the company is not engaged in the business of financing. Hencethe provisions of the clause 3(xvi) of the order are not applicable to the Company.
For PRSV & Co. LLP
Firm Registration No: S-200016
Membership No: 222068
Date: 20th May 2019