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Melstar Information Technologies Ltd.

BSE: 532307 Sector: IT
NSE: MELSTAR ISIN Code: INE817A01019
BSE 00:00 | 17 Feb 5.06 -0.26
(-4.89%)
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5.06

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5.06

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5.06

NSE 00:00 | 17 Feb 4.80
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OPEN

4.80

HIGH

4.80

LOW

4.80

OPEN 5.06
PREVIOUS CLOSE 5.32
VOLUME 6100
52-Week high 5.32
52-Week low 1.46
P/E
Mkt Cap.(Rs cr) 7
Buy Price 5.58
Buy Qty 1000.00
Sell Price 5.06
Sell Qty 48174.00
OPEN 5.06
CLOSE 5.32
VOLUME 6100
52-Week high 5.32
52-Week low 1.46
P/E
Mkt Cap.(Rs cr) 7
Buy Price 5.58
Buy Qty 1000.00
Sell Price 5.06
Sell Qty 48174.00

Melstar Information Technologies Ltd. (MELSTAR) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

MELSTAR INFORMATION TECHNOLOGIES LIMITED

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone Ind AS financial statements of MelstarInformation Technologies Limited ("the Company") which comprise the BalanceSheet as at 31st March 2018 and the Statement of Profit and Loss (including OtherComprehensive Income) the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and a summary of the significant accounting policies and otherexplanatory information.

Management's Responsibility for the Standalone Ind AS Financial Statements

2. 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 Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding 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 standalone Ind AS financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

Auditor's Responsibility

3. Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit. In conducting our audit we have taken into account theprovisions of the Act the accounting and auditing standards and matters which arerequired to be included in the audit report under the provisions of the Act and the Rulesmade there under. We conducted our audit of the standalone Ind AS financial statements inaccordance with the Standards on Auditing specified under Section 143(10) of the Act.Those Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the standalone Ind AS financialstatements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

5. We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

6. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31st March 2018 and its profit total comprehensive income its cash flowsand the changes in equity for the year ended on that date.

Emphasis of Matter

7. We draw attention to Note 28(k) of the standalone Ind AS financial statementsregarding preparation of the Ind AS standalone financial statements on going concern basisfor the reasons stated therein. The appropriateness of assumption of going concern isdependent upon realization of the various initiatives undertaken by the Company and/or theCompany's ability.

Report on Other Legal and Regulatory Requirements

8. As required by Section 143(3) of the Act based on our audit we report to theextent applicable 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 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 Ind AS financial statements comply with theIndian Accounting Standards prescribed under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31stMarch 2018 taken on record by the Board of Directors none of the directors aredisqualified as on 31st March 2018 from being appointed as a director in terms of Section164(2) of the Act and 3 new directors are appointed.

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". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

g) the matter described under the Emphasis of Matter paragraph above in our opinionmay have an adverse effect on the functioning of the Company.

h) 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 standalone Ind AS financial statements in accordance with the generallyaccepted accounting practice - also refer Note 28 (d) to the standalone Ind AS financialstatements.

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.

9. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

Other Matters

10. We did not audit the financial statements of subsidiaries as stated by themanagement. Further we draw attention to note 28(h) Of the financial statements for thestart of dissolution process of the subsidiaries.

For Sarda & Pareek
Chartered Accountants
Firm Registration No. 109262W
Place: Mumbai CA GauravSarda
Dated: : 29th May 2018 Partner
Membership Number: 110208

ANNEXURE - A TO THE INDEPENDENT AUDITOR'S REPORT

(REFERRED TO IN PARAGRAPH 8 (F) UNDER ‘REPORT ON OTHER LEGAL AND REGULATORYREQUIREMENTS' SECTION OF OUR REPORT TO THE MEMBERS OF MELSTAR INFORMATION TECHONOLOGIESLIMITED)

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 MelstarInformation Technologies Limited ("the Company") as of 31st March 2018 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor 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 responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditor's Responsibility

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

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's 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.

Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations 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 31st March 2018 based on the criteria forinternal control over financial reporting 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 Sarda & Pareek
Chartered Accountants
Firm Registration No. 109262W
Place: Mumbai CA GauravSarda
Dated: : 29th May 2018 Partner
Membership Number:110208

ANNEXURE - B TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 9 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Melstar Information TechnologiesLimited)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.

(b) The property plant and equipment were physically verified during the year by theManagement in accordance with a regular programme of verification which in our opinionprovides for physical verification of all the property plant and equipment at reasonableintervals.

In absence of reconciliation we are unable to comment on the discrepancies observed.

(c) Title deed of immovable property has not been produced before us for verification;however we were informed that the same has been deposited with bank for availing thecredit facilities.

(ii) The company is in the business of rendering services and consequently does nothave any inventories during the year. Consequently clause 3(ii) of the order is notapplicable to the company.

(iii) The Company has granted interest free loan of Rs.178.55 Lakhs to Birla PowerSolutions Ltd. Covered in the Register maintained under Section 189 of the Companies Act2013. No recoveries have been made and company has provided for Rs.178.55 Lakhs in earlieryears as doubtful recoveries.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.

(v) According to the information and explanations given to us the Company has notaccepted any deposit during the year hence compliance with the provisions of section 73to 76 of the Companies Act 2013 and the rules framed there under are not applicable.

(vi) According to the information and explanations given to us the central governmenthas not prescribed maintenance of Cost records under sub section (1) of section 148 ofcompanies Act 2013.

(vii) According to the information and explanations given to us in respect ofstatutory dues: (a) The Company is irregular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Goods and Service TaxSales tax Service Tax Customs Duty Excise Duty Value Added Tax Cess and othermaterial statutory dues applicable to it with the appropriate authorities.

(a) Details of outstanding undisputed Statutory dues at the year end and outstandingfor more than six months are as under

Particulars Total dues as on 31.03.2018 Outstanding for more than 6 months as on 31.03.2018
Withholding Taxes 22.59 Lakhs 9.78 Lakhs
Service Tax 205.17 Lakhs 205.17 Lakhs
GST 38.79 Lakhs 9.22 Lakhs
Maharashtra Value Added Tax 1.83 Lakhs 1.83 Lakhs
Provident Fund 21.20 Lakhs 13.40 Lakhs
Employees' State Insurance 6.31 Lakhs 3.07 Lakhs
Profession Tax 0.65 Lakhs -
Total 296.53 Lakhs 242.46 Lakhs

(b) According to the information and explanations given to us details of disputedstatutory dues which have not been deposited on account of matters pending before theconcerned authorities are as under:

Name of Statue Nature of Dues Amount Period to which the amount related Forum where dispute is pending
ESIC Act 1948 ESIC Liability 1.36 Lakhs F. Y 2005-06 ESIC Authority
Mumbai Municipal Corporation Act 1988 Property Tax 29.38 Lakhs F. Y. 2010-11 to F. Y 2017-18 Mumbai Court

(viii) In our opinion and according to the information and explanations given to usthe Company has defaulted in the repayment of interest of Rs.2.73 Lakhs in FY 17-18regarding clean Overdraft facilities and 0.29 Lakhs for cash credit.

(ix) The Company has not raised money by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause (ix) ofthe Order is not applicable

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor 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 CompaniesAct 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.

(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Sections 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 standalone financial statements etc. as requiredby the applicable Indian accounting standards.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (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 directors of its holding subsidiary or associate company or personsconnected with them and hence provisions of Section 192 of the Companies Act 2013 are notapplicable.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For Sarda & Pareek
Chartered Accountants
Firm Registration No. 109262W
Place: Mumbai CA Gaurav Sarda
Dated: 29th May 2018 Partner
Membership Number: 110208