To the Members of LINAKS MICROELECTRONICS LIMITED
Report on the Audit of the Standalone Financial Statements Opinion
W ehave audited the standalone financial statements of LINAKS MICROELECTRONICS LIMITED("the Company") which comprise the balance sheet as at 31st March 2021 and thestatement of Profit and Loss statement of changes in equity and statement of cash flowsfor the year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us theafore said standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 312021 andprofit/ loss changes inequity and its cashflows for the yearended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standardson Auditing (SAs) specifiedunder section 143( 10) of the Companies Act 2013. Our responsibilities under thoseStandards 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 together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act2013 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 ouropinion.
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 andinforming our opinion there on and we do not provide a separate opinion on these matters.
Reference be made to Para O (ii) of Notes on account which is as under:
(a) The developers of old site M/ S. CLARION TOWNSHIP (P) LIMITED the company thatwas given the leave and licence permission to develop the site could not progress beyond10-15% completion stage of Group Housing Project.They have run afoul with their lendingbank who have invoked SARFESAI against them and possessed the site. Since the arrangementof their financing was so structured that they had mortgaged their share of built upproject area but had also been extended a Corporate Guarantee by the company (LINAKSMICROELECTRONICS LTD.) to the lending bank to facilitate and speed- up thearrangement in the interest of expeditious execution. LINAKS MICROELECTRONICS LTD. hadtaken care to obtain a counter corporate Guarantee from the parent company of Clarionnamely Rohtas Projects Ltd. For the same amount to cover the overhang. As the leading bankof Clarion has invoked LINAKS MICROELECTRONICS LTD.'s corporate Guarantee the Linaks hassince also invoked corporate Guarantee of Rohtas to cover negative fallout.Simultaneously LINAKS MICROELECTRONICS LTD. is also in discussions our dues with the IRPwith the other construction companies to step into the shoes of clarion and complete theproject. To accomplish this LINAKS MICROELECTRONICS LTD. has initiated dialogues with allthe stake holders. The Bank has also moved a Joint application against the corporateDebtor(Clarion) and the corporate Guarantor (Linaks i.e us)with NCLT under the Insolvencyand Bankruptcy Board of India for their recovery. The Case has not been admitted as yet.Simultaneously the Flat Allottees of Clarion Townships Pvt. Ltd. hadmoved a similarpetition in NCLT for recoveries of their deposits & resolution which has been admittedin May21. We have also lodged our claim for the recovery of our dues with the IRP againstClarion Townships Pvt. Ltd. for the recovery of our balance dues.
(b) Given the devastation of the Pandemic on the Company's Finance and the total dryinguup of the fresh orders we have faced with the Uphill task of addressing the statutoryand regulatory expenses(BSENSDL CDSL. RTA Comp. Secy.etc.) along with the overheads ofminimum security land rental and wages of plant staff.These overheads were furthercompounded by the legal expenses being borne on SARFESAINCLTCivil and criminal suits.
As an interim measure to meet these unavoidable essential expenses for an initialperiod of 30 monthswe have entered into a leave &Licence plant rental agreement(terminable at 3 months notice) starting from feb.2021.
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 standalone financial statements that give a true and fair view of the financialposition financial performance (changes inequity) and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that a reeasonable and prudent; and designimplementation 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 statement that givea true and fair view and are free from material misstatement whether due to fraudorerror.
In preparing the financial statements management is responsible for assessing theCompany'sabilitytocontinueasagoingconcerndisclosing asapplicable matters related togoing concern and using the going concern basis of accounting unless management eitherintends to liquidate the Companyortoceaseoperationsor hasnorealisticalternativebuttodoso.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
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 misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance butis 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 reasonablybeexpected to influence the economic decisions of users taken on the basisof these financial statements.
Paragraph 40(b) of this SA explains that the shaded material below can be located inanAppendix to the auditor's report. Paragraph 40(c) explains that when law regulation orapplicable auditing standards expressly permit reference can be made to a website of anappropriate authority that contains the description of the auditor's responsibilitiesrather than including this material in the auditor's report provided that the descriptionon the website addresses and is not inconsistent with the description of the auditor'sresponsibilitiesbelow.
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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that issufficient 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 collusionforgeryintentional omissions 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 ofsuch
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 exists we are required todraw attention in our auditor's report to the related disclosures in the financialstatements or if such disclosures are inadequate to modify our opinion. Our conclusionsare based on the audit evidence obtained upto the date of our auditor'sreport. Howeverfuture events or conditions may cause the Company to cease to continue as a goingconcern.
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 fairpresentation.
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
As required by the Companies (Auditor's Report) Order 2016 ("theOrder")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.
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 ith theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts)Rules
(e) On the basis of the written representations received from the directors as on 31 stMarch 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 terms of Section164 (2) of theAct.
(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 "AnnexureA".
(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 tous:
1. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note o'(i) &o'(ii)under thehead significant accounting policies to the financial statements
2. The Company has made provision as required under the applicable law or. accountingstandards for material foreseeable losses if any on long- term contracts includingderivative contracts.
3. There were no amounts which were required to be transferred to the .. InvestorEducation and Protection Fund by the Compay.
The Annexure-A referred to in our report to the members of Linaks MicroelectronicsLtd. for the year ended on 31.03.2021
We report that:
|S.No. Particulars ||Auditors Remark |
|(i) (a) whether the company is maintaining proper records showing full particulars including quantitative details and situation of fixedassets; ||Yes |
|b) whether these fixed assets have been physically verified by the m anagement at reasonable intervals; whether any m aterialdiscrepancies were noticed on such verification and if so whether the same have been properly dealt with in the books ofaccount; ||Yes. No material Discrepancies were found. |
|(c) whether the title deeds of im movable properties are held in the name of the company. If not provide the details thereof; ||Yes |
|(ii) whether physical verification of inventory has been conducted at reasonable intervals by the management and whether any material discrepancies were noticed and if so whether they have been properly dealt with in the books ofaccount; ||Yes |
|(iii) whether the company has granted any loans secured or unsecured to companies firms Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act 2013. Ifso ||No loan is granted |
|(a) whether the terms and conditions ofthe grant of such loan s are not prejudencial to the company's interest; ||NA |
|(b) whether the schedule of repayment of principal and payment of interest has been stipulated and whether the repayments or receipts areregular; ||NA |
|(c) if the amount is overdue state the total amount overdue for more than ninety days and whether reasonable steps have been taken by the company for recovery of the principal and interest; ||NA |
|(iv) in respect of loans investments guarantees and security whether provisions of section 185 and 186 of the Companies Act 2013 have been complied with. If not provide the details thereof. ||NA |
|(v) in case the company has accepted deposits whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act 2013 and the rules framed thereunder where applicable have been com ||NA |
|plied with? If not the nature of such contraventions be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal whether the same has been complied with ornot? || |
|(vi) whether maintenance of cost records has been specified by the Central Government under subsection (1) of section 148 of the Companies Act 2013 and whether such accounts and records have been so made andmaintained. ||NA |
|(vii) (a) whether the company is regular in depositing undisputed statutory dues including provident fund employees' state insurance income-tax sales-tax service tax duty of customs duty of excise value added tax cessand any other statutory dues to the appropriate authorities and if not the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable shall be indicated; ||YES |
|(b) where dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax have not been deposited on account of any dispute then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not be treated as a dispute). ||As per Notes on Account point No. O (i). |
|(viii) whether the company has defaultedin repayment of loans or borrowing to a financial institution bank Government or dues to debenture holders? If yes the period and the amount of default to be reported (in case of defaults to banks financial institutions and Government lender wise details to beprovided). ||NO |
|(ix) whether moneys raised by way of initial public offer or further public offer (including debt instruments) and term loans were applied for the purposes for which those are raised. If not the details together with delays or default and subsequent rectification if any as m ay be applicable bereported. ||NA |
|(x) whether any fraud by the company or any fraud on the Company by its officers or employees has been noticed or reported during the year; If yes the nature and the amount involved is to beindicated; ||NO |
|(xi) whether managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act? If not state the amount involved and steps taken by the company for securing refund of thesame; ||YES |
|(xii) whether the Nidhi Company has complied with the Net Owned Funds to Deposits in the ratio of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining ten per cent unencumbered term deposits as specified in the Nidhi Rules 2014 to meet out theliability; ||NA |
|(xiii) whether all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act 2013 where applicable and the details have been disclosed in the Financial Statements etc. as required by the applicable accounting standards; ||YES |
|(xiv) whether the company has made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and if so as to whether the requirement of section 42 of the Companies Act 2013 have been complied with and the amount ||NA |
|raised have been used for the purposes for which the funds were raised. If not provide the details in respect of the amount involved and nature ofnon-compliance; (xv) whether the company has entered into any non- ||NO |
|cash transactions with directors or persons connected with him and if so whether the provisions of section 192 of Companies Act 2013 have been complied with (xvi) whether the company is required to be registered ||NO |
|under section 45-IA of the Reserve Bank of India Act 1934 and if so whether the registration has been obtained. || |
"ANNEXURE B" TO THE INDEPENDENT AUDIT OR'S REPORT OF THE EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OFLINAK S M ICROELECTRONICS LIM ITED ON THE FINANCIALCONTROLS UNDER CLAUSE (i) OF SUB SECTION 3 OF SECTION 143 OF COMPANIES ACT2013.
Section 143 of the Companies Act 2013:
We have audited the internal financial controls over financial reporting of LINAKS MICROELECTRONICS LIMITED as on March 31 2021 in conjunction with our audit of thestandalone 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 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 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 Reportingand the Standards on Auditing issued by ICAI and deemed to be prescribed 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 materialrespects.
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 orerror.
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 occurand not be detected. Alsoprojections of any evaluation of the internal financial controls over financial reportingto future periods are subject to the risk that
the internal financial control over financial reporting may become inadequate becauseof changes in conditions or that the degree of compliance with the policies or proceduresmaydeteriorate.
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 on March 31 2021 based on"the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants ofIndia".
For and on behalf of
Jaiswal Singh & Co.
CA. Jagdish Prasad Jaiswal
Membership Number: 078449