To the Members of
M/S SGN TELECOMS LIMITED
Report on the Audit of the Financial Statements
We have audited the financial statements of SGN TELECOMS LIMITED ("theCompany") which comprise the balance sheet as at 31st March 2021and the statementof Profit and Loss(statement of changes in equity)and statement of cash flows for theyear the ended and no test the financial statements including a summary of significantaccounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conform it with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2021 and profit (changes in equity) and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.
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.
|KAM on Related Party Transactions || |
|Key Audit Matter ||As a part of the business activity the Company deals with entities which are related parties and significant revenue sources are from related parties only. |
| ||The Arm's length pricing go the transactions with Related Parties risks of material misstatement associated with related party relationships and transactions may have significant impact on the interest of the Company and true and fair presentation of related party relationships and transactions in the financial statements of the Company. |
| ||Reference to related disclosures: Refer Note 2.29 to the Financial Statements. |
|Principal Au Procedures ||We performed following audit procedures relating to related party relationships and transactions. |
| || We inquired of management regarding: |
| || The identity of the Company's related parties including changes from the prior period; |
| || The nature of the relationships between the Company and related parties; and |
| || The type and purpose of the transactions with related parties. |
| || Identify account for and disclose related party relationships and transactions In accordance with the applicable financial reporting framework; |
| || Confirmations obtained from related parties for an outstanding balances as part of our audit procedures; |
| || Performed appropriate substantive audit procedures relating to identified related parties and related party transactions. |
| || Evaluate the terms of the related party transactions that these are consistent with management's explanations. |
| || Ensured that all Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature. |
| || Inquired that the Company has adopted a Related Party Transactions Policy approved by the Board and transactions are as per the policy. |
| ||Conclusion: Our procedures did not identify any material exceptions. |
|KAM on Migration to new information systems || |
|Key Audit Matter ||Information Technology (IT)systems and controls |
| ||During the year the company implemented SAP a new Enterprise Resource Planning (ERP) system. The new system is a fully integrated financial accounting and reporting system. |
| ||The implementation of a new system has an inherent risk of loss of integrity of key financial data being migrated and the breakdown in operation or monitoring of IT dependent controls within critical business processes such as purchasing selling and recording of transaction which could lead to financial errors or misstatements and inaccurate financial reporting. |
| ||The Company's financial accounting and reporting systems are heav dependent on the new system and there is a risk that automat accounting procedures and related IT dependent manual controls are n designed and operating effectively. |
|Principal Audit Procedures ||We have reviewed the information systems migration process and Information Technology General Controls (ITGC)with the assistance of IT audit specialists our procedures included: |
| || Testing General IT Control s: Testing general IT controls around system access change management and computer operations with in specific applications pertinent to the financial statements by assessing appropriate policies are in place and adhered to by inspecting supporting evidence. Also assessed the operation of control so very changes or transactions being recorded In the systems and testing manual compensating controls such as reconciliations between systems and other information sources through reperformance or inspection. |
| || Testing Data Migration: Were viewed the management's planning and processes around systems migration in order as certain how controls in existing information systems are mapped into new information systems .We also independently tested completeness validity and accuracy of transaction and master data migrated to new information system. |
| ||Extended scope: Where general IT controls and compensating manual controls where inadequate or ineffective we performed additional substantive testing such as using extended sample sizes and performing data analysis routines over impacted accounts to test the integrity of the transactional level data that is flowing into the Company's financial statements. |
| ||Conclusion: Our procedures did not identify any material exceptions. |
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexure to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the financialstatements 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.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 (changes in equity) and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate 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 statements thatgive a 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 withStandard on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material If individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
As part of an audit in accordance with Standard on Auditing we exercise professionaljudgment and maintain professional scepticism throughout the audit.
i. Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
ii. Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
iii. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
iv. Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
v. Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a
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 the Companies (Auditor's Report) Order 2016 ("the Order'')issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure-A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the 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 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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 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".
(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:
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 financial statements - Refer Note 2.30 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There were no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company during the year.
For ANEET & ASSOCAITES
Chartered Accountants Firm Regn No: 0014815N
M.No:- 090380 Place : Mohali Date : 30.06.2021
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)
(i) In respect of its Fixed Assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The fixed assets have not been physically verified by the management during the yearbut the Company has a system of periodic verification of fixed assets. In our opinion thefrequency of verification is at reasonable intervals considering the size of the Company.
c) The title deeds of immovable properties are held in the name of the Company.
(ii) In respects of Inventory:
a. There are no operations or activity carried by the company during the year. Thereare no stocks lying in the company.
b. Since there are no stocks .There is no need of any physical verification of stock
(i) Company has not granted any loan secured or unsecured to companies firms LimitedLiability Partnerships or other parties listed in the register maintained under Section189
of the Act. There are Advances amounting to Rs. 7603021.65 outstanding since long whichare not recoverable and hence written off during the year.
(ii) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and I86 of the Companies Act 2013in respect of loans investments guarantees and security.
(iii) The Company has not accepted any deposits from the public and hence thedirectives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 orany other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules2015 with regard to the deposits accepted from the public are not applicable.
(iv) There are not stock lying so no need to maintain cost account.
(iii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The Company has been generally regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Sales Tax Customs DutyExcise Duty Value Added Tax Cess Goods and Service tax and other material statutorydues applicable to it to the appropriate authorities. Also refer Note 2.31 to financialstatements.
(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Sales Tax Service Tax Customs Duty Excise Duty ValueAdded Tax Cess Goods and Service tax and other material statutory dues in arrears as atMarch 31 2021 for a period of more than six months from the date they became payable.
(c) The details of dues of Income Tax & Excise duty which have not been depositedas on March 312021 on account of disputes are given below:
(Rs. In Lakhs)
|Statute ||Nature ||Forum where dispute is pending ||Period to which the Amount relates ||Amount involved |
|Nil ||Nil ||Nil ||Nil ||Nil |
(iv) In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to Banks Financial Institutions andGovernment or debenture holders.
(v) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause 3 (ix)of the Order are not applicable to the Company and not commented upon.
(vi) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or on the Company by its officers or employees hasbeen noticed or
reported during the year.
(vii) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act.
(viii) The Company is not a Nidhi Company and hence reporting under clause 3 (xii) ofthe Order is not applicable to the Company.
(ix) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(x) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause 3 (xiv) of the Order is not applicable to the Company.
(xi) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with him. Accordingly the provisions of clause 3(xv) ofthe Order are not applicable to the Company and hence not commented upon.
(xii) In our opinion the Company is not required to be registered under section 45-1of the Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi)of the Order are not applicable to the Company and hence not commented upon.
For ANEET & ASSOCAITES
Firm Regn No: 0014815N
Place : Mohali
Date : 30.06.2021
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph "f" under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of M/S SGNTELECOMS LIMITED as of March 312021 in conjunction with our audit of the financialstatements 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 Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessthe safeguarding 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.
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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 whether the risk of a material weakness exists and testing and evaluating thedesign and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor1s judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that:
(1) pertain to the maintenance 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 authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized 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 detectedAlso 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.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2021 based on "the Internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India".