The Members of
MAXIMAA SYSTEMS LIMITED
Report on the Audit of Standalone Ind-AS Financial Statements for F.Y. 2019-20
We have audited the accompanying Standalone financial statements of M/s. MAXIMAASYSTEMS LIMITED("the Company") which comprise the Balance Sheet as at March31 2020 the Statement of Profit and Loss (including other comprehensive income) theStatement of Changes in Equity and the Cash Flow Statement for the year then ended andNotes to the financial statement including summary of significant accounting policies andother explanatory information. (herein after referred to as "Standalone Ind-ASFinancial Statements").
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 (the Act) in the manner so required and give a true and fairview in conformity with the Indian Accounting Standards prescribed under section 133 ofthe Act read with Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2020 its Loss (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.
Basis of Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules made there under and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the Code ofEthics.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe Key Audit matter to be communicated in our Report.
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|Key Audit Matter ||How the matter was addressed in our audit |
|Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind-AS 115 "Revenue from Contracts with Customers" (new revenue accounting standard) The application of the new revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognised over a period. Additionally new revenue accounting standard contains disclosures which involves collection of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. ||We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
| ||Evaluated the design of internal controls relating to implementation of the new revenue accounting standard. Selected a sample of continuing and new contracts and performed the following procedures: |
| ||1. Read analysed and identified the distinct performance obligations in these contracts. |
| ||2. Compared these performance obligations with that identified and recorded by the Company. |
| ||3. Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration. |
| ||4. Samples in respect of revenue recorded for material contracts were tested using a combination of customer acceptances subsequent invoicing and historical trend of collections and disputes. |
| ||In respect of samples relating to fixed price contracts progress towards satisfaction of performance obligation used to compute recorded revenue was verified with actual and estimated efforts. |
| ||Performed analytical procedures for reasonableness of revenues disclosed. |
|Contingent Liabilities ||Principal Audit Procedures |
|The company has few on-going legal matters relating to statutory taxes which require management judgement to be applied in order to determine the likely outcome. ||In assessing the potential exposures to the Company we have completed a range of procedures including: |
| ||assessing the design and implementation of controls in relation to the monitoring of known exposures; |
| ||reading Board and other meeting minutes to identify areas subject to Company consideration; reviewing third party correspondence and reports; and |
| ||reviewing the proposed accounting and disclosure of actual and potential legal liabilities drawing on third party assess- ment of open matters. |
Information Other than the Standalone Financial Statements and Auditor's report thereon
The Company's Board of Directors is responsible for the preparation of otherinformation. The Other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to the Board report CorporateGovernance report and Shareholder's information but does not include the standalonefinancial statement and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do 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 and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course 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 required to report that fact. We have nothingto 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 Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance (includingother comprehensive income) changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the accountingStandards specified under section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand 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 unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibility for the Audit of the Standalone Ind-AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements 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 from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit.
Identify and assess the risks of material misstatement of the standalone 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 intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial control system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the 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 entity'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 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 entity to cease to continue as agoing concern.
Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
During our audit we have observed that Company has became NPA with the Bank sincefive years due to failure of repayment of long term borrowings received from the Company'sBanker.
During the audit period we have noticed that Production Unit of Storage Division ofthe Company situated at Dharampur Valsad Gujarat has been sealed by the Bank videletter dated October 11 2019.
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 standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) Planning the scope of ouraudit work and in evaluating the results of our work and (ii)To evaluate the effect of antidentified misstatements in the standalone 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 specifiedin paragraphs 3 and 4 of the said Order.
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 purpose of our audit;
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Cash Flow Statement and the Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid Standalone financial statements comply with the IndianAccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Account) Rules 2014.
e) On the basis of written representations received from the directors as on March 312020 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2020 from being appointed as a director in terms of Section 164 (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 "Annexure B" and
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Sec 197(16)of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.
h) With respect to the matters to be included in the Auditor's Report in accordancewith
Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us:
a) The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements;
b) The company does not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses;
c) There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the company.
FOR C D KHAKHKHAR & CO. Firm Registration No. 141767W CHARTERED ACCOUNTANTS
(CHETAN KHAKHKHAR) PROPRIETOR
M. No. 122647
Place: Valsad Date: 31/07/2020
Annexure A" to the Independent Auditors' Report"
Referred to in paragraph 1 under the heading Report on Other Legal &Regulatory Requirement' of our report of even date to the Standalone financial statementsof the
Company for the year ended March 31 2020; we report that
1) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipments.
(b) As explained to us the Plant and Equipment have been physically verified by themanagement in a phased manner designed to cover all the items over a period of threeyears which in our opinion is reasonable having regard to the size of the company andnature of its business. Pursuant to the program a portion of the Property Plant andEquipments has been physically verified by the management during the year and no materialdiscrepancies between the books records and the physical property plant and equipmenthave been noticed.
(c) According to the information and explanations given to us and on the basis of ourexamination of the record of the company the title deeds of immovable properties are heldin the name of the company.
2) The Inventory of finished goods raw materials components stores and spare partshas been physically verified at reasonable intervals by the management. In our opinionthe frequency of such verification is reasonable. No material discrepancies were noticedon physical verification of inventories as compared to books records.
3) The Company has granted interest free loans secured or unsecured to companiesfirms Limited Liability Partnerships or other parties covered in the Register maintainedunder section189 of the Act and as detailed in the related party transactions disclosurein the notes. According to the information and explanations given to us and in our opinionthe terms and condition on which such advances have been given to parties listed inregister maintained under section 189 of the Companies Act are not prima facie prejudicialto the interest of the Company. The parties are regular in repaying the advances or theyare either being adjusted or being repaid regularly.
4) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Companies Act 2013in respect of loans and investments.
5) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.
6) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Act. We have broadly reviewed the cost records maintained by theCompany pursuant to Companies (Cost Records and Audit) Rules 2014 as amended by theCentral Government of India maintenance of cost records has been prescribed undersub-section (1) of Section 148 of the Companies Act and is of the opinion that primafacie the prescribed accounts and records have been made and maintained. However we havenot made a detailed examination of the cost records with a view to determine whether theyare accurate or complete.
7) (a) According to the records of the company and the information and explanationsgiven to us and on the basis of our examination of the books of account and records theCompany has been generally regular in depositing undisputed statutory dues includingProvident Fund Employees State Insurance Income-Tax Custom Duty Goods and Service TaxAct Cess and other material statutory dues as applicable to it to the appropriateauthorities. According to the information and explanations given to us no undisputedamounts payable in respect of the above were in arrears as at March 31 2020 for a periodof more than six months from the date they became payable.
b) According to the information and explanation given to us there are no dues ofincome tax sales tax service tax duty of customs duty of excise value added taxoutstanding on account of any dispute.
8) In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to any financial institutions andbanks.
9) Based upon the audit procedures performed and the information and explanations givenby the management the company has not raised moneys by way of initial public offer orfurther public offer including debt instruments and term Loans. Accordingly theprovisions of clause 3 (ix) of the Order are not applicable to the Company and hence notcommented upon.
10) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
11) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid in accordance with theprovisions of section 197 read with Schedule V to the Companies Act;
12) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 3 (xii) of the Order are not applicable to the Company.
13) According to the information and explanations given to us and on the basis of ourexamination of the record of the company in our opinion all transactions with the relatedparties are in compliance with section 177 and 188 of Companies Act 2013 and the detailshave been disclosed in the Ind AS Financial Statements as required by the applicableaccounting standards.
14. The Company has neither made any preferential allotment of shares nor fully orpartly convertible debentures during the year under audit.
15) According to the information and explanations given to us and on the basis of ourexamination of the records of the company the company has not entered into any non-cashtransactions with directors or persons connected with the company. Accordingly theprovisions of clause 3 (xv) of the Order are not applicable to the Company and hence notcommented upon.
16) In our opinion the company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi) ofthe Order are not applicable to the Company and hence not commented upon.
FOR C D KHAKHKHAR & CO. Firm Registration No. 141767W CHARTERED ACCOUNTANTS
(CHETAN KHAKHKHAR) PROPRIETOR
M. No. 122647
"Annexure B" to the Independent Auditor's Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of M/S.MAXIMAA SYSTEMS LIMITED ("the Company") as of March 31 2020 in conjunctionwith our audit of the Standalone financial statements of the Company for the year ended onthat 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 Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance
Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;(2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and(3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanation givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2020 based on the criteria forInternal Financial control over Financial Reporting 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 C D KHAKHKHAR & CO. Firm Registration No. 141767W CHARTERED ACCOUNTANTS
M. No. 122647