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Melstar Information Technologies Ltd.

BSE: 532307 Sector: IT
NSE: MELSTAR ISIN Code: INE817A01019
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VOLUME 1874
52-Week high 4.92
52-Week low 1.64
P/E
Mkt Cap.(Rs cr) 3
Buy Price 0.00
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Sell Price 0.00
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OPEN 1.91
CLOSE 2.00
VOLUME 1874
52-Week high 4.92
52-Week low 1.64
P/E
Mkt Cap.(Rs cr) 3
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Melstar Information Technologies Ltd. (MELSTAR) - Auditors Report

Company auditors report

To the Members of Melstar Information Technologies Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying Financial Statements of Melstar InformationTechnologies Limited ("the Company") which comprise the Balance Sheet as at31st March 2019 the Statement of Profit and Loss and Statement of Cash Flow for theperiod ended on that date and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred asthe "Financial 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 trueand fair view in conformity with the Accounting Principles Generally accepted in India ofthe state of affairs of the Company as at March 312019 the profit and totalcomprehensive income and its cash flows for the year ended on that date

Basis for Opinion

We conducted our audit in accordance with the Standards on 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 Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion on the StandaloneFinancial Statements.

Information Other than the Financial Statements and Auditors' Report Thereon

The Board of Directors are responsible for the other information. The other informationcomprises the information included in the annual report but does not include thefinancial statements and our auditor's report thereon. The annual report is expected to bemade available to us after the date of this auditor's report.

Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

When we read the annual report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance andreport it to respective regulatory authorities.

Responsibility of Management for 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 and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statement that give a true and fair view andare free from material misstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

The 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 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 financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

i) Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

ii) 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.

iii) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

iv) Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty 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.

v) 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.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

Emphasis of matter

We draw attention to note 27(k) of the standalone IND AS financial statements regardingpreparation of IND AS standalone financial statements on going concern basis for thereason stated therein. The appropriateness of assumption of going concern is dependentupon realization of the various initiative undertaken by the company and/or the company'sability and our opinion is not modified to that extent.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.

d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors 2 directors is disqualified as on31st March 2019 from being appointed as a director in terms of Section 164 (2) of the Actand 1 new director is appointed.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate 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 in our opinionand to the best of our information and according to the explanations given to us:

i) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements in notes 37(f).

ii) 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.

iii) The requirement of transferring amount to Investor Education and Protection Fundis not applicable to the Company during the year ended 31stMarch 2019.

h) With respect to the matter to be included in the Auditor's Report under section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

2) As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) Act we give in"Annexure B" a statement on the matters specified in paragraph 3 & 4 of theorder to the extent applicable.

For SARDA & PAREEK
Chartered Accountants
Firm's Registration Number: 109262W
S/d-
CA. Gaurav Sarda
Mumbai Partner
May 29 2019 Membership Number: 110208

"ANNEXURE A" TO THE AUDITOR'S REPORT

(Referred to in paragraph 1(f) under "Report on Other Legal and RegulatoryRequirements section of our report to the members of Melstar Information TechnologiesLimited of even date)

Report on the Internal Financial controls under clause (i) of sub-section 3 of section143 of the Act

We have audited the internal financial controls over financial reporting of MelstarInformation Technologies Limited ("the Company") as of 31st March 2019 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 2019 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's Registration Number: 109262W
S/d-
CA. Gaurav Sarda
Mumbai Partner
May 29 2019 Membership Number: 110208

"ANNEXURE B" TO THE AUDITOR'S REPORT

Annexure referred to in Para 2 of our Report of even date on the financial statementsfor the year ended March 31 2019 of Melstar Information Technologies Limited.

Report as per Sub-section 11 of Section 143 of the Companies Act 2013 ("theAct").

Based on the audit procedures performed for the purpose of reporting a true and fairview of the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books and other records examined by us inthe normal course of our audit in our opinion and to the best of our knowledge we reportthat:

i) In respect of Fixed Assets :

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. According to the information and explanations given to us no materialdiscrepancies were noticed on such verification.

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) The company is in the business of rendering services and consequently does not haveany inventories during the year. Consequently clause 3(ii) of the order is not applicableto the company

iii) The Company has granted interest free loan of Rs 178.55 lakhs to Birla powersolution Ltd covered in register maintained under section 189 of the companies Act2013.No recoveries have been made and company has provided for Rs 178.55 lakhs in earlier yearsas doubtful recoveries.

iv) 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 grant of loans making investments and providing guarantees and securitiesas applicable.

v) According to the information and explanations given to us the Company has compliedwith Sections 73 to 76 or any other relevant provisions of the Act and the rules framedthere under with regard to the deposits accepted. Accordingly there have been noproceeding before the Company Law Board or National Company Law Tribunal or any court orany other Tribunal in this matter and no order has been passed by any of aforesaidauthorities.

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 Act2013

vii) According to the information and explanations given to us in respect of statutorydues:

a. The Company is irregular in depositing undisputed statutory dues including ProvidentFund Employees' State Insurance Income- tax Goods and Service Tax Value Added TaxCess and other material statutory dues applicable to it with the appropriate authorities.Details of outstanding undisputed statutory dues at the year end and outstanding for morethan six months are as under

(Rs in Lakhs)
Particulars Total dues as on 31.03.2019 Outstanding for more than 6 months as on 31.03.2019
GST 69.44 45.96
Service Tax 155.31 155.31
VAT 1.83 1.83
TDS 10.87 -
ESIC 0.35 -
PF 2.35 -
PT 0.36 -

b. The dues outstanding in respect of Sales- Tax duty of excise Value added Tax onaccount of any dispute are as follows:

(Rs in Lakhs)
Name of the Statute Nature of dues Amount Period Forum where dispute is pending
ESIC Act1948 ESIC Liability 1.36 F.Y2005-06 ESIC Authority
Total 1.36

viii) In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of loan or borrowings to the banks government andfinancial institutions. The Company does not have any debentures issued/outstanding at anytime during the year.

ix) In our opinion and according to the information and explanations given to usmonies raised by way of the term loans during the year have been applied by the Companyfor the purposes for which they were raised. The Company has not raised any money by wayof initial public offer or further public offer (including debt instruments) during theyear.

x) To the best of our knowledge and according to the information and explanations givento us no fraud by the Company and no material fraud on the Company by its officers oremployees 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) According to the information and explanations given to us and based on ourexamination of the records of the company the Company has not made any preferentialallotment or Private placement of shares or fully or partly convertible debenture duringthe year. Accordingly provision of clause 3(xiv)of the order is not applicable.

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's Registration Number: 109262W
S/d-
CA. Gaurav Sarda
Mumbai Partner
May 29 2019 Membership Number: 110208

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