You are here » Home » Companies » Company Overview » Opto Circuits (India) Ltd

Opto Circuits (India) Ltd.

BSE: 532391 Sector: Health care
NSE: OPTOCIRCUI ISIN Code: INE808B01016
BSE 00:00 | 17 Jul 13.81 0.65
(4.94%)
OPEN

13.49

HIGH

13.81

LOW

13.48

NSE 00:00 | 17 Jul 13.75 0.65
(4.96%)
OPEN

13.40

HIGH

13.75

LOW

13.35

OPEN 13.49
PREVIOUS CLOSE 13.16
VOLUME 416928
52-Week high 16.35
52-Week low 6.84
P/E 20.92
Mkt Cap.(Rs cr) 397
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 13.49
CLOSE 13.16
VOLUME 416928
52-Week high 16.35
52-Week low 6.84
P/E 20.92
Mkt Cap.(Rs cr) 397
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Opto Circuits (India) Ltd. (OPTOCIRCUI) - Auditors Report

Company auditors report

To

The Members of

Opto Circuits (India) Ltd Bangalore

REPORT ON THE STANDALONE IND AS FINANCIAL STATEMENTS

We have audited the accompanying Standalone Ind As Financial Statements of OptoCircuits (India) Ltd ("the Company") which comprise the Balance Sheet as at31 March 2017 the Statement of Profit and Loss (including other comprehensive income)the statement of changes in equityand the Cash Flow Statement for the year then endedand a summary of the significant accounting policies and other explanatory information.

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE IND AS FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in sub-section 5of Section 134 of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone Ind As financial statements that give a true and fair viewof the financial position financial performance including other comprehensive incomethestatement of changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Ind 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 safeguardingthe 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 statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

AUDITOR'S RESPONSIBILITY

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 in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Standalone Ind As Financial Statements. The procedures selecteddepend on the auditors' 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.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion.

BASIS FOR QUALIFIED OPINION

We draw your attention:

a) Regarding the trade receivables amounting to Rs. 22332.98Lakhs (includesdues Rs. 21795.18 Lakhs more than 36 months) Trade Payables amounting to Rs.4112.25 Lakhs (Overseas payables Rs.1229.48Lakhs more than 36 months)there is no confirmation of balances available supporting the outstandingreceivables and payables. Although receivables of Rs. 21795.18 Lakhs and payablesof Rs. 1257.10 Lakhs over 36 months the provisioning/ write off of such debts andwrite back of liabilities could not be ascertained.

b) During the course of audit we observed that company has suspended itsbusiness operation in SEZ unit at vizag since 1st April 2017. We further noticedthat there were stocks resulted in not being sold aggregating to Rs.8625.10Lakhs. The management has not assessed realizable value of the above said stock. Insuch a situation we are unable to express our opinion as to the correctnessof value of the stock and also its impact on the profit / loss of the company.

c) The Company has borrowings from State Bank of India HDFC Bank Ltd Yes BankLtd Standard Chartered Bank Ltd and Bank of Nova Scotia Ltd for which noprovision for interest is made in the financial statements as these Bankshave categorized the respective borrowings as NPA. The Management has submittedproposals for One Time Settlement [OTS] with Standard Chartered Bank LtdState Bank of India HDFC Bank Ltd and Bank of Nova Scotia Ltd. With StandardChartered Bank Ltd the company has already Repaid Rs 20.75 Crores towards partsettlement of OTS and the balance of Rs 62 Crores in a phased manner [3 years time]which is under consideration. With State Bank of India the Company has alreadyPaid Rs 2.50 Crores towards OTS [Out of Total OTS Proposal of Rs 86.50 Crores] tobe paid in 22 Months and that the proposal is under consideration. With HDFCBank Ltd and Bank of Nova Scotia Ltd the company has submitted proposal which areunder negotiation.

d) The Company holds investment in its subsidiary OptoCardiac Care Limitedamounting to Rs. 20005.50 Lakhs and advances amounting to Rs. 51633.65 Lakhs andhas not been able to ascertain the impairment of investments and advances inthis subsidiary due to hostile takeover of its step-down subsidiary (Cardiac ScienceCorporationInc USA) and the resultant pending litigation before the US BankruptcyCourts.

d) The company has the following short term borrowings from the banks as on thedate of balance sheet:

Name of the bank Facility Amount (in Rs. crores)
Bank of Nova Scotia Ltd working capital 11916.00
HDFC bank ltd working capital 5047.00
State Bank of India working capital 17796.30
Standard Chartered Bank Ltd working capital 21521.78
Yes Bank Ltd Working capital 3043.47
TOTAL 59324.55

Banks have classified these liabilities as irregular advances. Bank of NovaScotia Ltd and HDFC Bank Ltd have issued winding up notices dated 03/06/2014 and24/11/2014 respectively for recovery of the above said outstanding dues and thebankers have filed winding up petition in the Hon'ble High Court of Karnataka againstthe company.

State bank of India has issued Notice under SARFAESI ACT on factory buildingand current assets of the company. State Bank of India has taken symbolic possessionof the property at 83 Electronic City Phase-1 Hosur Road Bangalore and has putup notice for auctioning of the property.

f) Opto Circuits (India) Ltd has given advance of Rs. 1615.19 lakhs to itssubsidiary Advanced Micronics Devices Ltd (holding 59% of shareholding). Thesubsidiary has stopped its business operation since July2015. In this situationit is difficult to realize this amount and company has not made necessary provisionin this regard.

g) In view of the IND AS 36 Impairment of Assets the management of the companyhas to demonstrate how the Intangible Asset will generate the probable future economicbenefits also has to allocate the resources to complete use and obtain thebenefit from the Intangible Asset. As the company's Management has not allocatedany resource allocations/commitments during the year and in the absence ofproviding the report containing the future economic benefits we are unable tocomment on the carrying value of Rs. 10210.43 /- Lakhs of such Intangibleasset.

QUALIFIED OPINION

Subject to the above qualifications in our opinion and to the best of our informationand according to the explanations given to us the aforesaid standalone financialstatements give the information required by the Act in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at 31 March 2017 and its loss thechanges in equity and its cash flows for the year ended on that date.

EMPHASIS OF MATTER

1. Company along with its step down subsidiary (Cardiac Science Corporation) hadborrowed funds from DBS Bank Ltd. In the year 2014-15 the said loan was restructured andas part of the said process Rs.12678.41 lakhs borrowed by the company was alsorestructured. As per the terms of the agreement with DBS Bank ltd upon default by stepdown subsidiary ( Cardiac Science Corporation) the bank exercised their rights andassigned the debts to a third party and also exercised proxy voting rights to takemanagement control of the company . As a result of this the loan borrowed by the companyto the tune of Rs. 12678.41 lakhs lacs stands extinguished. DBS Bank has objected to thestand taken by the Company and also want to classify the loan as red flagged account andrecommended for a forensic audit. The banks also have convened a Joint Lender Forum on theabove matter.

The Company has raised objections to the stand taken by DBS Bank and moved the Courtand obtained Injunction Order [ Under Order F.R. NO: O.S. /292/2017 dated 06th March 2017from the Hon'ble City Civil Court restraining the Bank [ DBS bank] from

A] Declaring the Company as Willfuldefaulters

B] Classifying the company's loan account as substandard or red flagged account

C] Appointing/ conducting any forensic audit in the precincts of the company.

The Company also made a claim of USD 160.82 Million against DBS Bank Ltd vide itsletter dated 24th January 2017 and this claim is part of the above petition filed beforethe Hon'ble Court by the Company and that the matter is before the Hon'ble High Court. TheCompany has also informed all the other Banks in the above matter. Since matter issub-judice we cannot express our opinion on the above matter and its impact on financialliability.

2. We draw your attention regarding the figures for the quarter ended March 31 2017which are the balancing figures between audited figures in respect of the full financialyear and the published year-to-date figures up to the third quarter of the currentfinancial year which were subjected to limited review by us.

Our opinion is not modified in respect of the above said matters.

REPORT ON OTHER LEGAL REGULATORY REQUIREMENT

1. As required by the companies (Auditors Report) Order 2016 ("the order")issued by the Central Government of in terms of section 143(11) of the Act we give inAnnexure A astatement on the matters specified in the paragraph 3 and 4 of the order tothe extent applicable.

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 except for the indeterminate effects of the matters described in theBasis for qualified Opinion paragraph proper books of account as required by law havebeen kept by the Company 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 changes in equity and the Cash Flow Statement dealt with by this Report are inagreement with the books of account.

d) In our opinion except for the indeterminate effects of the matters described in theBasis for qualified Opinion paragraph the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withRule 7 of the Companies (Accounts) Rules 2014.

e) On the basis of the written representations received from the directors as on 31March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2017 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 B. Our report expresses an unmodified opinion on the adequacyand operating effectiveness of the company's internal financial controls over financialreporting.

g) With respect to the other matters to be included in the Auditors' 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 as at 31 March 2017 onits financial position in its standalone financial statements – Refer NoteNo.15B(9)(10) No.31Band 31D.

ii. The Company is not required to make provision as at 31 March 2017 as requiredunder the applicable law or accounting standards for material foreseeable losses if anyon long-term contracts since the Company did not have any derivative contracts as at 31March 2017.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31 March2017. iv. The company has provided requisite disclosures in the Ind AS financialstatements as regards its holding and dealings in specified bank notes as defined in thenotification S.O 3407(E) Dt: Nov 8/2016 of the ministry of finance during the period fromNovember 8 2016 to December 30 2016. Based on audit procedures performed and therepresentation provided to us by the management we report that the disclosures are inaccordance with the books of accounts maintained by the company and as produced to us bythe management.

For B. V. Swami & Co.

Chartered Accountants

A. AMARANATH

Partner

Membership Number: 213629

Firm Registration Number: 009151S

Place: Bengaluru

Date: 30th May 2017

ANNEXURE A TO INDEPENDENT AUDITORS' REPORT

Report on Companies (Auditor's Report) Order 2016' issued by the Central Governmentof India in terms of sub-section (11) of section 143 of the Act of Opto Circuits (India)Ltd(The Company) The Annexure Referred to in Independent Auditors' Report to the membersof the Company on the standalone financial statements for the year ended 31 March 2017 wereport that:

i. In respect of the company's Property plant & equipment

(a) The Company is maintaining proper records showing full particularsincluding quantitative details and situation of Property plant & equipment.

(b) The Property plant & equipment of the Company have been physicallyverified by the firm of chartered accountant M V Rao &Associates during theyear. Based on report given by independent chartered accountant in our opinion nomaterial discrepancies have been noticed on such verification.

(c) According to the information and explanations given to us and the recordsexamined by us and based on the examination of the conveyance deed provided tous we report that the title deeds comprising all the immovable properties of Land& Building which are free hold are held in the name of the Company as at theBalance sheet date.

ii. Subject to point (b) under basis for qualification the physicalverification of inventory has been conducted at periodical intervals by theManagement but not effectively conducted during the year. As certified by themanagement the discrepancies noticed on physical verification of inventory ascompared to book records were not material. However we recommend the Managementto conduct the physical verification of inventories on quarterly basis and maintainproper records commensurate to the nature and size of the business.

iii. (a) Subject to the qualification in the audit report and as per theexplanations given to us the Company has granted unsecured loans to the partieslisted in the register maintained under Section 189 of the Companies Act.

(b) In respect of the aforesaid the company has given loans and advances to itssubsidiaries aggregating to Rs. 75090.62 Lakhs for which no interest is collectedfrom the loans granted to its subsidiaries during the year.

(c) In respect of the aforesaid loans there is no amount which is overdue formore than ninety days.

iv. In our opinion and according to the information and explanations given tous the Company has complied with the provisions of Section 185 and 186 ofthe Companies Act 2013 in respect of the loans and investments made andguarantees and security provided by it.

v. The company has not accepted deposits during the year and doesn't have anyunclaimed deposits as at March31 2017 and therefore the provisions of the clause3(v) of the order are not applicable to the company.

vi. Reporting under clause 3(vi) of the order is not applicable as the company'sbusiness activities are not covered by the companies (cost records and audit) rule2014.

vii. We have broadly reviewed the records maintained by the Company pursuant tothe rules prescribed by Central Government for maintenance of cost records undersub section 1 of Section 148 of the Act and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained. However wehave not made a detailed examination of the records.

viii. (a) According to the information and explanations given to us and therecords of the Company examined by us in our opinion the Company is generallyregular in depositing undisputed statutory dues in respect of providentfund employeesRs. state insurance professional tax duty of customs sales taxthough there has been a slight delay in a few cases and is regular in depositingundisputed statutory dues including service tax as applicable with theappropriate authorities. According to the information and explanations given to usthere were no statutory dues payable for more than six months.

(b) According to the information and explanations given to us there is no amountpayable in respect of wealth tax service tax sales tax customs duty and exciseduty which have not been deposited on account of any disputes.

However according to information and explanation given to us the following duesof income tax have not

Name of the statute Nameof dues Amount (in Rs. crores) Period to which it relates Forumwhere dispute is pending
Income Tax Authority Demand Raised by IT U/S 154 6.36 A Y 2007-08 CIT (Appeals)
Income Tax Authority Minimum Alternative Tax 0.58 A Y 2010-11 CIT (Appeals)
Income Tax Authority Minimum Alternative Tax 3.65 A Y 2011-12 CIT (Appeals)
Income Tax Authority Minimum Alternative Tax 1.00 A Y 2012-13 CIT (Appeals)
Income Tax Authority Minimum Alternative Tax 95.86 A Y 2013-14 CIT (Appeals)
Income Tax Authority Dividend Tax 17.57 A Y 2010-11 High Court writ appeal
Income Tax Authority Dividend Tax 18.00 A Y 2011-12 High Court writ appeal
Income Tax Authority Dividend Tax 13.80 A Y 2012-13 High Court writ appeal

been deposited by the company on the account of dispute. ix. According to the recordsof the Company examined by us and the information and explanations given to us exceptfor short term borrowings for working capital as below the Company has notdefaulted in repayment of loans or borrowings to any financial institution or bankor Government or dues to debenture holders as at the balance sheet date.

Name of the bank Facility Amount (in Rs. lacs)
Bank of Nova Scotia Ltd working capital 11916.00
HDFC bank ltd working capital 5047.00
State Bank of India working capital 17796.30
Standard Chartered Bank Ltd working capital 21521.78
Yes Bank Ltd working capital 3043.47
Total 59324.55

x. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans during the year underreview. Accordingly the provisions of Clause 3(ix) of the Order are not applicableto the Company.

xi. To the best of our knowledge and according to the informationandexplanations given to us no fraud by the company and no material fraud on the company byits officers or employees has been noticed or reported during the year.

xii. In our opinion and according to the information and explanations given tous the Company has paid/ provided for managerial remuneration in accordance withthe requisite approvals mandated by the provisions of Section 197 read withSchedule V to the Act.

xiii. The Company is not a Nidhi Company and the Nidhi Rules 2014 are notapplicable to it the provisions of Clause 3(xii) of the Order are not applicableto the Company.

xiv. In our opinion and according to the information's and explanations given tous and based on our examination of the records of the Company transaction with therelated parties are in compliance with the provisions of Sections 177 and 188of the Act where applicableand details of such transactions have been disclosed inthe IND AS financial statements as required under Accounting Standard.

xv. During the year the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during theyear under review. Accordingly the provisions of Clause 3(xiv) of the Orderare not applicable to the Company.

xvi. In our opinion and according to the information and explanations given tous during the year the Company has not entered into any non-cash transactions withits directors or persons connected to its directors and hence provision ofthe section 192 of the act are not applicable to the Company.

xvii. The Company is not required to be registered under Section 45-IA of theReserve Bank of India Act 1934.

FOR B. V. SWAMI & CO.

Chartered Accountants

A. AMARANATH

Partner

Membership Number: 213629

Firm Registration Number: 009151S

Place: Bengaluru

Date: 30th May 2017

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT - 31ST MARCH 2017

(Referred to in our report of even date)

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION143 OF THE ACT OF THE OPTO CIRCUITS (INDIA) LTD.

We have audited the internal financial controls over financial reporting of OptoCircuits (India) Ltd ("the Company") as of 31st March 2017 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 controls over financial reporting criteriaestablished by the Company considering the essential components of internal controlsstated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India ("ICAI").These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly ande_cient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 ("theAct").

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 accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing issued by ICAI and deemed to be prescribed under section 143(10) ofthe Act to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the

ICAI. 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 controls based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the Standalone Ind As Financial Statements whether dueto 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 control systemover financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company's internal financial controls 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 controls 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.

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 controlsover 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 control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2017 based on theinternal controls over financial reporting criteria established by the Company consideringthe essential components of internal controls stated in the Guidance Note.

FOR B. V. SWAMI & CO.

Chartered Accountants

A. AMARANATH

Partner

Membership Number: 213629

Firm Registration Number: 009151S

Place: Bengaluru

Date: Date: 30th May 2017