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Nettlinx Ltd.

BSE: 511658 Sector: Telecom
NSE: N.A. ISIN Code: INE027D01019
BSE 00:00 | 26 Feb 68.65 -0.20
(-0.29%)
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68.65

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68.85

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NSE 05:30 | 01 Jan Nettlinx Ltd
OPEN 68.65
PREVIOUS CLOSE 68.85
VOLUME 2478
52-Week high 72.50
52-Week low 12.75
P/E 167.44
Mkt Cap.(Rs cr) 79
Buy Price 67.10
Buy Qty 10.00
Sell Price 68.85
Sell Qty 38.00
OPEN 68.65
CLOSE 68.85
VOLUME 2478
52-Week high 72.50
52-Week low 12.75
P/E 167.44
Mkt Cap.(Rs cr) 79
Buy Price 67.10
Buy Qty 10.00
Sell Price 68.85
Sell Qty 38.00

Nettlinx Ltd. (NETTLINX) - Auditors Report

Company auditors report

To

The Members of M/s. Nettlinx Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of M/s. NettlinxLimited (‘the Company') which comprise the balance sheet as at March 312019 thestatement of profit and loss (including other comprehensive income) the statement of cashflows and the statement of changes in equity for the year ended and a summary of thesignificant accounting policies and other explanatory information (herein after referredto as "standalone financial statements").

In our opinion and to the best of our information and according to the explanationgiven 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 Indian Accounting Standards prescribed under section133 of the Act read with the Compaies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the company as at March 31 2019 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Emphasis of Matter

We draw attention to the following point to the standalone financial results:

• As on 31st March 2019 company provided short term unsecured loan amountingRs.115628588/- to its subsidiary (Nettlinx Reality Private Limited) without anyrepayment terms & conditions. Company is recognizing the interest amountingRs.12759866/- on the above loan @ 12% p.a. But company has not received the interestamount from its subsidiary since the inception of the loan.

Basis for opinion

We conducted our audit of the standalone financial statements in accordance with thestandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the Standalone financial statements.

Key Audit Matters

Key Audit Matters are those matters that in our professional judgement 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 matters to be communicated in our report.

Key Audit Matter Auditor's Response
Our Audit procedure in respect of this area included:
1 Provision for Impairment loss in account receivables. Understand and assess the management's estimate and related policies used in the credit loss analysis.
The credit loss provision in respect of account receivables represent management's best estimate of the credit losses incurred on the receivables at the balance sheet date. Performed test of key controls to analyze operating effectiveness relating to calculation of impairment provisions.
We have identified provisioning for credit loss as a key audit matter as the calculation of credit loss provision is a complex area and requires management to make significant assumptions on customer payment behaviour and estimating the level and timing of expected future cash flows. Reviewed the data flows from source systems to spreadsheet-based models to test their completeness and accuracy.
Refer to Note No.6 to the standalone financial statements. For Expected Credit Loss (ECL) of trade receivables assessed on individual level by the management examined on a test check basis the objective evidence relating to the impairment of trade receivables and the key assumptions used in the estimate of the cash short falls and reviewed whether amounts have been recovered after the end of reporting period.
Obtained debtor's credit information on sample basis to ascertain whether the classification of debtors is in compliance with the company's policy.
Reviewed the management's ageing analysis based on days past due by examining the original documents (such as invoices and bank deposit advices).
Verified the calculation of ECL of each type of trade receivables according to the provision matrix.
2 a) The company has granted loans (including interest accrued) aggregating to . 190241723/- to its Subsidiaries Nettlinx Reality private Limited Sri Venkateswara Green Power Projects Limited as at March 312019. Our procedures included amongst others the following:Understanding and evaluating the design and testing the operating effectiveness of the Company's control over review of impairment assessment of "Investment in subsidiaries"; and recognition of provision for loans (including interest accrued);In respect of impairment assessment of "Loans to subsidiaries";
Considering the deteriorated financial position of the "Subsidiaries" there are indicators of potential impairment of loans (including interest accrued) as set out in (a) above. Assessing reasonableness of the Management's historical business forecasts by comparing the business forecasts used in the prior year with the actual performance in the current year.
The Management has assessed the impairment of Company's "Investment in Subsidiaries" by reviewing the business forecast of "Subsidiaries" using discounted cash flow valuation model and noted that no provision for impairment is required to be made in respect of these loans (including interest accrued). Testing the mathematical accuracy of the underlying model reviewing reasonableness of the assumptions/ information considered in the model by examining source data and supporting documentation and checking the impairment assessment prepared by the management.
Comparing the business forecasts with the latest Board approved budgets;
We considered this as a Key audit matter due to significant judgements involved in estimating future cash flows in the model prepared by the Management to support the carrying value of above loans (including interest accrued) and determining significant assumptions of discount rate terminal growth rate etc. adopted in this model.(Refer Note No.8 to the Standalone Financial statements). Considered the work of external independent valuation expert engaged by the Group;
Assessed the independent valuation expert's methods competency and objectivity;
Involving auditor's valuation experts for testing appropriateness of the method and model used evaluating reasonableness and challenging key assumptions used such as discount rate terminal growth rate etc. adopted by the management in the model;
Understanding of the operating parameters used in the model and assessing consistency of our understanding of parameters with those considered in the model;
Performing sensitivity tests on the model by analysing the impact of using alternate assumptions of discount rates terminal growth rates etc. within a reasonable and foreseeable range.
Considered the results of the aforesaid procedures in evaluating the recoverability of loans (including interest accrued).
Based on the above procedures performed we noted that the Management's assessment of impairment of investments in subsidiaries recoverability of loans (including interest accrued) to subsidiaries is reasonable.

Information other than the Standalone Financial Statements and Auditor's Report thereon

The Company's Board of Directors are responsible for the preparation of otherinformation. The other information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the standalonefinancial statements 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 on 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 are required to report the fact. We havenothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India prescribed under Section 133 of the Act read with relevant rules issuedthereunder.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the company's ability to continue as 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 responsible for overseeingthe company's financial reporting process.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances.

An audit also includes evaluating the appropriateness of the accounting policies usedand the reasonableness of the accounting estimates made by the Company's Directors aswell as evaluating the overall presentation of the standalone financial statements.

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.

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 section 143(11) of the Act we givein the Annexure A a statement on the matters specified in the paragraph 3 and 4 of theorder.

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 purposes of our audit.

(b) In our opinion proper books of accounts 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 the statement of cash flowsand the statement of changes in equity dealt with by this Report are in agreement with thebooks of account;

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with relevant rule issuedthereunder;

(e) on the basis of the written representations received from the directors as on March312018 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 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".

(g) with respect to the other matters to be included in the Auditor's Report inaccordance with Requirements of section 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 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 standalone financial statements.

ii) There is no requirement for any provision as required by any act or Accountingstandards for material for foreseeable losses if any on long term contracts includingderivative contracts.

iii) There are no amounts required to be transferred to the Investor Education andProtection Fund by the Company.

For C Ramachandram & Co.
Chartered Accountants
Firm Registration No. 002864S
Sd/-
Premnath Degala
Place: Hyderabad Partner
Date: 20.05.2019 M.No: 207133

Annexure A to the Auditors' Report

Annexure referred to in paragraph under ‘Report on Other Legal and RegulatoryRequirements' section of our report of the Independent Auditors' Report of even date ofNETTLINX LIMITED on the standalone financial statements for the year ended March 31 2019

i. In terms of the information and explanations sought by us and given by the companyand the books and records examined by us in the normal course of audit and to the best ofour knowledge and belief we state the following:

a) The Company is generally maintaining proper records showing full particularsincluding quantitative details and situation for all fixed assets.

b) The company generally have regular programme of physical verification of fixedassets by which fixed assets were verified in a phased manner over a period of threeyears. B.

c) According to information and explanation given to us title deeds of immovableProperties are held in the name of the company.

ii. The company has no inventory thus paragraph 3(ii) of the Order is not applicableto the company.

iii. The company has granted loans secured or unsecured to Companies Firms LimitedLiability Partnerships or other parties covered in the register maintained under section189 of the Companies Act 2013. Thus paragraph 3(iii) of the Order is applicable to thecompany. However the company has given advances to the companies firms other partiescovered in the register maintained under section 189 of the Act and in our opinion and tothe best of our examination the terms are not prejudicial to the interests of thecompany.

iv. The Company has not made any transactions in the nature of loans investmentsguarantees and security where provisions of section 185 and 186 of the Companies Act2013 are applicable. Thus paragraph 3(iv) of the Order is not applicable to the Company.

v. The company has not accepted any deposits within the meaning of provisions ofSections 73 to 76 or any other relevant provisions of the Companies Act 2013 and therules framed there under. Thus paragraph 3(v) of the Order is not applicable to thecompany.

vi. According to information and explanation given to us the Central Government hasnot prescribed maintenance of cost records as per section 148 of Companies act 2013.

vii. a) The Company is generally regular in depositing undisputed statutory duesincluding Provident fund Employees' State Insurance Income-tax Sales Tax Service TaxCustoms Duty Value Added Tax GST Cess and other material statutory dues applicable toit to the appropriate authorities.

b) As per the information given by the company generally there are no material dues ofduty of customs income tax sales tax duty of excise service tax which have not beendeposited with the appropriate authorities on account of any dispute as on March 31 2019.

viii. In our opinion and according to information and explanations given to us thecompany has not defaulted in payment of dues to Banks Government Financial Institutionsas on date of Balance Sheet.

ix. The company has not raised any moneys by way of initial public offer or furtherpublic offer (including debt instruments) during the reporting period. According toinformation provided to us term loans availed during the reporting period was applied forthe purposes for which those were raised.

x. According to the information and explanations given to us no material fraud by thecompany or on the company by its officers or employees has been noticed or reported duringthe course of our audit.

xi. According to information and explanation given to us the company has providedmanagerial remuneration in accordance with Section 197 read with schedule V to theCompanies Act 2013.

xii. In our opinion the company is not a Nidhi Company. Accordingly paragraph 3(xii)of the Order is not applicable for the company.

xiii. In our opinion and according to information and explanations given to us alltransactions with the related parties are in compliance with Sections 177 and 188 ofCompanies Act 2013 and the details of such transactions have been disclosed in theFinancial statements of the company as required by applicable Accounting Standards.

xiv. According to information and explanation given to us the company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.

xv. According to information and explanation given to us the company has not enteredinto non-cash transactions with directors or any persons connected with him. Thusparagraph 3(xv) of the Order is not applicable to the company.

xvi. In our opinion the company is not required to be registered under section 45IA ofReserve Bank of

India Act 1934. Thus paragraph 3(xv) of the Order is not applicable to the company.

For C Ramachandram & Co.
Chartered Accountants
Firm Registration No. 002864S
Sd/-
Premnath Degala
Place: Hyderabad Partner
Date: 20.05.2019 M.No: 207133

Annexure - B to the Auditors' 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/SNETTLINX LIMITED ("the Company") as of March 312019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

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').Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

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 be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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 judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles.

A company's internal financial control over financial reporting includes those policiesand 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) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria 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 Ramachandram & Co.
Chartered Accountants
Firm Registration No. 002864S
Sd/-
Premnath Degala
Place: Hyderabad Partner
Date: 20.05.2019 M.No: 207133

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