TO THE MEMBERS OF N2N TECHNOLOGIES LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of N2N TECHNOLOGIES LIMITED(CIN: L72900PN1985PLC145004) ("the Company") which comprise the balance sheetas at 31st March 2020 and the statement of Profit and Loss (including Other ComprehensiveIncome) and statement of cash flows for the year then ended and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation (herein after referred to as "the financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph below the aforesaid financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended ("Ind AS") and other accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2020 the loss and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Qualified 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 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 our opinion.
1. The Company being a listed Company as per Section 138 of Companies Act 2013read with Rule 13 of Companies (Accounts) Rules 2014 Company is required to appointInternal Auditor. However the Company has not complied with the same.
2. The Company has not established its Internal Financial Controls overfinancial reporting on criteria based on or considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India.
3. The Company has not Made Provision for Professional Tax during the currentfinancial year amounting to Rs. 2500; TDS payable amounting to Rs. 42591 is outstandingfor payment for more than 1 year However interest and penalty for the same is notaccounted for and accordingly Loss is understated to that extent However exactcalculation of interest liability is not ascertainable as the said balances are carriedforward balances.
Emphasis of Matter
We draw attention to Note 24 to the accompanying annual financial results whichdescribe management s assessment of uncertainty relating to the effects of the COVID-19pandemic on the Company s operations
We draw attention to Note 23 to the accompanying annual financial results whichdescribe the following: a. Balances in the accounts of other financial liabilities TradePayables Loans & Advances Bank
Balance are subject to confirmation / reconciliation & availability of relevantsupporting documents & Agreements. The management does not expect any materialadjustment in respect of the same effecting the financial statements on suchreconciliation / adjustments.
b. Intangible Assets "IPR" amounting to Rs. 915.02 lakhs is not tested forimpairment during the current year. Management is of the opinion that in financial year2020-2021 they will assign this IPRs to other IT company and the replacement value ofthis IPR s are higher than the book value.
c. Director with "DIN : 01250926" "Name : Mahalakshmi Dandapani "is disqualified as on 31 March 2020 from being appointed as a director in terms ofSection 164(2) of the Act.
d. Company being a listed Company is required to follow Section 203 of Companies Act2013. However in the absence of appropriate candidate for filling the vacancy of CompanySecretary the said Key Managerial Person as per Section 203 has not been appointed duringfinancial year 2019-20. Subsequently Mr Shrirang Gosavi as full time Company Secretarywas appointed on June 25 2020
e. On the basis of the Certificate received from Practicing Company Secretary i.e.Hardik Savla (Membership No. A23685) dated 7th August 2020 having UDIN No.A023685B000561068 issued for Outstanding Balance of Trade payables as at March 31 2020which was outstanding for payment for more than 12 months do no classify to be as Depositsas per section 2(31) of the Companies Act. 2013 and there are no violation or Rule 2( I)(c)(xii) of the Companies (Acceptance of Deposits) Rules 2014.
f. The Management does not have sufficient information in respect of the classificationof Trade Payable Outstanding as on 31st March 2020 as MSME Hence we assume that TradePayables are not registered under MSME.
g. It reflects from the Income tax portal that demand of Rs 7319360 & Rs.2837040 for A.Y. 2014-15 & AY 2017-18 respectively is outstanding for payment.However Management is under process for necessary submission and accordingly contingentliability is provided.
Our opinion is not modified in respect of this matter.
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 and informing our opinion thereon and we do not provide a separate opinion on these matters.Based on the circumstances and facts of the audit and entity there are not key auditmatters to be communicated in our report.
Information other than the Financial Statements and Auditor s Report thereon
The Company s Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor s report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information; weare required to report that fact. We have nothing to report in this regard.
Responsibility of Management for the 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the accounting Standards specified undersection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate implementation and maintenance of accountingpolicies; making judgments and estimates that are reasonable 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 fraud orerror.
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.
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 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 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 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 financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management s use of the going concern 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.
Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually 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.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor s report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit report 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 statement of changes in equity dealt with by thisReport are in agreement with the books of account;
d) In our opinion the aforesaid financial statements comply with the Indian AccountingStandards specified under Section 133 of the Act read with relevant rules issuedthereunder.
e) On the basis of written representations received from the directors as on 31March 2020 taken on record by the Board of Directors and as per our verification Directorwith " "DIN:01250926" "Name "Mahalakshmi Dandapani" isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164(2) of the Act.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A"; and
g) With respect to the other matters to be included in the Auditor s Report inaccordance with the requirements of section 197(16) of the Act as amended:
h) 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.
i) With respect to the other matters to be included in the Auditor s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements. Refer Note 17 to the financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses under the applicable law or accountingstandards;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company if any; and
2. As required by the Companies (Auditor s Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act we givein the "Annexure- B" a statement on the matters specified in paragraphs 3and 4 of the Order.
For Maheshwari & Co.
Pawan Gattani Partner
Membership No. 144734
Date: 7th August 2020
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1(f) under the heading Report on Other Legal and RegulatoryRequirements of our report of even date)
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 N2NTECHNOLOGIES LIMITED ("the Company") as of 31 March 2020 in conjunction withour audit of the 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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to companys policies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on my/our audit conducted in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing to the extent applicable to anaudit of internal financial controls both issued by the Institute of CharteredAccountants of India.
Because of the matter described in Disclaimer of Opinion paragraph below we were notable to obtain sufficient appropriate audit evidence to provide a basis for an auditopinion on internal financial controls system over financial reporting of the Company.
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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
Disclaimer of Opinion
According to the information and explanation given to us the Company has notestablished its internal financial control over financial reporting on criteria based onor considering 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 of India. Because of this reason we are unable to obtain sufficientappropriate audit evidence to provide a basis for my / our opinion whether the Company hadadequate internal financial controls over financial reporting and whether such internalfinancial controls were operating effectively as at March 31 2020.
We have considered the disclaimer reported above in determining the nature timing andextent of audit tests applied in our audit of the financial statements of the Company andthe disclaimer does not affect our opinion on the financial statements of the Company.
For Maheshwari & Co.
Membership No. 144734
Date: 7th August 2020
ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2 under the heading Report on Other Legal and RegulatoryRequirements of our report of even date)
1. a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets except Intangible assets i.e. IPR.
b) Fixed assets have been verified by the management in accordance with a phasedprogramme of verification which in our opinion is reasonable having regard to the sizeof the Company and the nature of its assets though all the assets were not verifiedby the management during the year and Intangible Assets "IPR" amounting to Rs915.02 lacs is not tested for impairment.
c) According to the information and explanations given to us the company does not holdany immovable property in its name.
2. According to the information and explanation given to us the company does not holdany inventories in physical form. Thus paragraph 3(ii) of the Order is not applicable tothe Company.
3. According to information and explanations given to us The Company has granted loansto one party covered in the register maintained under section 189 of the Companies Act2013 ( the Act ). The amount Outstanding being INR 24531520/- of 1 party respectively.
a) According to the information and explanations given to us and based on the auditprocedures conducted by us we are of the opinion that the terms and conditions of loansgranted by the company to 1 party covered in the register maintained under section 189 ofthe Companies Act 2013 (total loan amount granted Rs. Nil during current year andbalance outstanding as at balance sheet date Rs 24531520 are prejudicial to thecompany's interest on account of the fact that the loans have been granted interest freetherefore lower than the cost of funds to the company and also lower than the prevailingyield of government security close to the tenor of the loan.
b) In the case of loans granted to the parties covered in the register maintained undersection 189 of the Act regularity in payment of the principal and interest could not becommented upon as the Terms and conditions for the repayment of the principal and paymentof interest is not specified.
c) In the case of loans granted to the parties covered in the register maintained undersection 189 of the Act amount overdue in respect of loan granted could not be commentedupon as the Terms and conditions for the repayment of the principal and payment ofinterest is not specified.
4. According to information and explanations given to us the company had grantedloan to DSR Infotech Limited in which one of the director is director in non-compliance ofSection 185 of the Companies Act 2013. Maximum amount outstanding during the year toDSR Infotech Limited is INR 24531520 and the amount outstanding as at the balance sheetdate is INR 24531520.The Company has not made any investment given guarantees andsecurity as per the provisions of provisions of section 186 of the Act.
5. According to the information and explanations given to us the Company has notaccepted any deposits within the meaning of Sections 73 to 76 or any other relevantprovisions of the Companies Act and the rules framed thereunder during the year.Accordingly the provisions of clause (v) of paragraph 3 of the Order are not applicableto the Company.
6. In our opinion and according to the information and explanations given to us therequirement for maintenance of cost records specified by the Central Government underSection 148(1) of the Companies Act are not applicable to the Company during the year.
7. (a) According to the information and explanation given to us the Company has beengenerally regular in depositing the undisputed statutory dues including provident fundemployees state insurance sales tax service tax Goods and Service Tax custom dutyexcise duty value added tax cess and other material statutory dues as applicable withthe appropriate authorities. No undisputed amounts payable in respect of aforesaidstatutory dues were outstanding as on the last day of the financial year for a period ofmore than six months from the date they became payable except as shown below:
|Nature of statute ||Nature of the dues ||Amount (Rs.) ||Period to which the amount related ||Remark if any |
|Income Tax Act 1961 ||TDS 194-J ||42591 ||F. Y. 2016-17 to F.Y 2018-19 ||Outstanding as on 31st March 2020 |
| || || ||F.Y. 2016-17 || |
|Profession Tax ||PTEC ||5000 || || |
| || || ||F.Y. 2017-18 || |
|Profession Tax ||PTRC ||200 ||F Y. 2016-17 || |
(b) According to the information and explanations given to us there are no dues ofsales tax service tax customs duty excise duty value added tax and cess which havenot been deposited on account of any dispute with the relevant authorities. Howeveraccording to information and explanations given to us the following dues of Income taxhave not been deposited by the Company on account of disputes:
|Nature of statute ||Nature of the dues ||Amount ||Period to which the amount related ||Forum where dispute pending |
| || ||(Rs.) || || |
|Income Tax Act 1961 ||Income Tax and Interest thereon (Substantive Addition) ||97702258 ||A. Y. 2010-11 ||Commissioner of Income Tax (Appeal) |
|Income Tax Act 1961 ||Income Tax and Interest thereon ||5321748 ||A. Y. 2008-09 ||Commissioner of Income Tax (Appeal) |
|Income Tax Act 1961 ||Income Tax and Interest thereon ||4760610 ||A. Y. 2012-13 ||Commissioner of Income Tax (Appeal) |
|Income Tax Act 1961 ||Income Tax and Interest thereon ||7319360 ||A. Y. 2014-15 ||Asst. Commissioner of Income Tax |
8. The Company does not have any loans or borrowings from any financial institutionbanks government or debenture holders during the year. Accordingly paragraph 3(viii) ofthe Order is not applicable.
9. According to the information and explanations given to us the Company has notraised moneys by way of initial public offer or further public offer (including debtinstruments) and the term loans during the year.
10. According to the information and explanation given to us we have neither comeacross any instances of fraud by the Company or any fraud on the Company by its officersor employees have been noticed or reported during the year nor have we been informed ofany such cases by the management.
11. 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.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly the provisions of clause 3(xii) of the Orderare not applicable to the Company.
13. 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 Ind AS financial statements etc. as required bythe applicable accounting standards.
14. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made preferential allotmentor private placement of shares or fully or partly convertible debentures during the year.
15. According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him duringthe year.
16. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company is not required to be registeredunder Section 45-IA of the Reserve Bank of India Act 1934.
For Maheshwari & Co.
Pawan Gattani Partner
Membership No. 144734
Date: 7th August 2020