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 at 31March 2018 the Statement of Profit and Loss (including other comprehensive income) thestatement of changes in equity and the Cash Flow Statement for the year then ended and asummary 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 income thestatement of changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under Section 133 of the Act.
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 financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
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 the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the rules made 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 '23079.90 Lakhs (includes dues'21871.88 Lakhs more than 36 months) Trade Payables amounting to '5055.30 Lakhs(Overseas payables '2123.83 Lakhs more than 36 months) there are no confirmation ofbalances available supporting the outstanding receivables and payables. Althoughreceivables of '21871.88 Lakhs and payables of '2123.83 Lakhs over 36 months theprovisioning/write off of such debts and write back of liabilities could not beascertained.
b) The Company holds investment in its Subsidiary Opto Cardiac Care Limited amountingto '20005.50 Lakhs and advances amounting to '55157.34 Lakhs and has not been able toascertain the impairment loss of investments and advances in this subsidiary which hasreported a consolidated negative net worth of '3531.35 Lakhs as against the carryingamount of '75162.84 Lakhs.
c) The company has the following short term borrowings from the banks as on the date ofbalance sheet:
|Name of the bank ||Facility ||Amount (in ' Lakhs) |
|Bank of Nova Scotia Ltd ||Working Capital ||11890.92 |
|HDFC bank ltd ||Working Capital/ Term Loan ||5817.60 |
|State Bank of India ||Working Capital ||16253.78 |
|Yes Bank Ltd ||Working Capital ||3043.47 |
|TOTAL ||37005.77 |
(i) Banks have classified these liabilities as NPA/Irregular Advances and as such notcharging the interest accordingly finance cost/interest is not provided for
(ii) The Bank of Nova Scotia Ltd and HDFC Bank Ltd have issued winding up notices dated03/06/2014 and 24/11/2014 respectively for recovery of the above said outstanding duesand the bankers have filed winding up petition in the Hon'ble High Court of Karnatakaagainst the company for which no provision of interest is made in the financialstatements as these Banks have categorized the respective borrowings as NPA. Management isnegotiating for One Time Settlement (OTS)/Compromise Settlement from State Bank of IndiaBank of Nova Scotia Ltd and HDFC Bank Ltd.
(iii) State bank of India has issued Notice under SARFAESI ACT on factory building andcurrent assets of the company. State Bank of India has taken symbolic possession of theproperty at 83 Electronic City Phase-1 Hosur Road Bangalore and has put up notice forauctioning of the property the management is negotiating for One Time Settlement(OTS)/Compromise settlement.
d) Opto Circuits (India) Ltd has given advance of '1642.25 Lakhs and investment of'524.61 Lakhs to its subsidiary Advanced Micronic Devices Ltd ( holding 59% ofshareholding). The subsidiary has stopped its business operation since July 2015 reporteda negative net worth of '4688.15 Lakhs. In this situation it is difficult to realizethese amount and company has not made necessary provision in this regard for theImpairment Loss.
e) In view of the Ind AS 36 Impairment of Assets the management of the company has todemonstrate how the Intangible Asset will generate the probable future economic benefitsalso has to allocate the resources to complete use and obtain the benefit from theIntangible Asset. As the company's Management has not allocated any resourceallocations/commitments during the year and in the absence of providing the reportcontaining the future economic benefits we are unable to comment on the carrying value of'15710.43 /- Lakhs of such Intangible asset.
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:
(a) in the case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2018;
(b) in the case of the Statement of Profit and Loss of the profit for the year endedon that date;
(c) in the case of the Cash Flow Statement of the cash flows for the year ended onthat date; and
(d) in the case of the Statement of Changes in Equity changes for the year ended onthat 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 '12678.41 Lakhs borrowed by the company was also restructured.As per the terms of the agreement with DBS Bank ltd upon default by step down subsidiary( Cardiac Science Corporation) the bank exercised their rights and assigned the debts to athird party and also exercised proxy voting rights to take management control of thecompany . As a result of this the loan borrowed by the company to the tune of '12678.41Lakhs stands extinguished. DBS Bank has objected to the stand taken by the Company.
The Company has raised objections to the stand taken by DBS Bank and filed a originalsuit before the jurisdictional Civil Court. The suit is pending before courts
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 and DRT-Bangalore recovery proceedings. Since matter is sub-judice wecannot express our opinion on the above claims and its impact on financial liability.
2. With respect to debt with Standard Chartered Bank Ltd the company has made andagreed for negotiated settlement with the Standard Chartered Bank for '6200 Lakhs asagainst outstanding liability of '21521.78 Lakhs. The differential amount of '15321.78Lakhs has been treated as contingent liability until the final settlement of agreedamount.
Our opinion is not modified in respect of the above said matters.
REPORT ON OTHER LEGAL REGULATORY
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 statement on the matters specified in the paragraph 3 and 4 of the order to theextent 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 statements complywith the Accounting Standards specified under Section 133 of the Act read with Rule 3 ofthe Companies (Indian Accounting Standards) Rules 2015 and companies (Indian AccountingStandards) amendment Rules 2016.
e) On the basis of the written representations received from the directors as on 31March 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2018 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 2018 onits financial position in its standalone financial statements - Refer Note No.15B No.31.
ii. The Company is not required to make provision as at 31 March 2018 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 2018.
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 March2018.
For B. V. SWAMI & CO.
Membership Number: 213629
Firm Registration Number: 009151S
Date: 30th April 2018