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Span Divergent Ltd.

BSE: 524727 Sector: Others
NSE: N.A. ISIN Code: INE004E01016
BSE 00:00 | 13 Apr 12.00 -0.80
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NSE 05:30 | 01 Jan Span Divergent Ltd
OPEN 12.00
PREVIOUS CLOSE 12.80
VOLUME 70
52-Week high 17.80
52-Week low 8.66
P/E 8.39
Mkt Cap.(Rs cr) 7
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 12.00
CLOSE 12.80
VOLUME 70
52-Week high 17.80
52-Week low 8.66
P/E 8.39
Mkt Cap.(Rs cr) 7
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Span Divergent Ltd. (SPANDIVERGENT) - Auditors Report

Company auditors report

To the Members of Span Divergent Limited

(Formerly known as Span Diagnostics Limited)

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statements of SpanDivergent Limited ("the Company") which comprise the Balance Sheet as at March31 2019 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year then ended andnotes to the standalone Ind AS financial statements including a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"standalone Ind AS financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India including the Indian Accounting Standards ("Ind AS") of the state ofaffairs of the Company as at March 31 2019 its loss (including other comprehensiveincome) changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with Standards on Auditing (SAs) specified undersection 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial 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 ("ICAI") together with the ethical requirements that are relevant to ouraudit of the standalone Ind AS financial statements under the provisions of the Act andRules thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalone Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.We have determined the matter described below to bethe key audit matter to be communicated in our report:

Key Audit Matter How was the matter addressed in our audit
Impairment assessment of carrying value of investments in LLPs Our audit procedures on impairment testing of investments in LLPs includes the following : Obtained understanding and evaluated the design and implementation of the processes and internal controls relating to impairment of investments in LLPs;
(Refer Note 6(a)(i) and Note 29 to the standalone financial statements) Tested the operating effectiveness of the Company's controls over review of impairment assessment of investments in subsidiaries;
The Company has investments in LLPs of Rs. 2335.90 lakhs (after impairment losses on investments) as Partners' Capital by way of fixed as well as fluctuating capital.
The Management has assessed the impairment of its investment in its aforesaid LLPsby reviewing the business forecasts of the LLPs using discounted cash flow valuation model (the "model") and noted that except one LLPi.e.Biospan Scientific LLP no provision for impairment is required to be made in respect of these investments as they are considered good. Biospan Scientific LLP has incurred a net loss of Rs. 9.82 lakhs during the year ended March 31 2019 and has accumulated losses as of that date which has led to substantial erosion in the net worth.Hence the Company has impaired its investment in the LLP by Rs. 183.09 lakhs and disclosed the same as an exceptional item during the year. Performed the following substantive procedures:
We have considered this as a key audit matter due to significant judgment involved in estimating future cash flows in the model prepared by the Management to support the carrying value of above investments and determining significant assumptions of discount rate terminal growth rate etc. adopted in the model. i. Assessed 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;
ii. Tested 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;
iii. Compared the business forecasts with the latest Board approved budgets;
iv. Considered the work of external independent valuation expert engaged by the Company;
v. Assessed the independent valuation expert's methods competency and objectivity;
vi. Obtained understanding of the operating parameters used in the model and assessing consistency of our understanding of parameters with those considered in the model; and
vii. Performed sensitivity tests on the model by analysing the impact of using alternate assumptions for discount rates terminal growth rates etc. within a reasonable and foreseeable range.

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe standalone Ind AS financial statements and our auditor's report thereon.

Our opinion on the standalone Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone Ind AS financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone IndAS Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone Ind AS financialstatements that give a true and fair view of the financial positionfinancialperformance(including other comprehensive income) changes in equity and cash flowsof theCompany in accordance with the accounting principles generally accepted in Indiaincluding Ind AS specified under section 133 of the Act read with relevant rules issuedthereunder. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standaloneInd AS financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements management is responsible forassessing the Company's ability to continue as a 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.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of this standalone Ind AS financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone Ind AS financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

Evaluate the overall presentation structure and content of the standalone Ind ASfinancial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

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 Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

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 "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 ofthe 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 (including Other ComprehensiveIncome) the Statement of Changes in Equity andthe Statement of Cash Flows dealt with bythis report are in agreement with the books of account;

d. In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards specified under section 133 of the Act read with relevantrules issued thereunder;

e. On the basis of the written representations received from the directors as on March31 2019 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2019 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 with reference tofinancial statements of the Company and the operating effectiveness of such controls wegive our separate report in "Annexure 2";

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;

In our opinion and to the best of our information and according to the explanationsgiven to us the managerial remuneration has been paid/provided by the Company to itsdirectors during the year is in accordance 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 stand alone Ind AS financial statements – Refer Note 20on ContingentLiabilities to the stand alone Ind AS financial statements;

(ii) The Company did not have any long-term contracts including derivative contracts.Hence the question of any material foreseeable losses does not arise;

(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For Haribhakti & Co.LLP

Chartered Accountants

ICAI Firm Registration No.103523W/W100048

Hemant J. Bhatt

Partner

Membership No.036834

Place: Surat

Date: May 17 2019

ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'in the Independent Auditor's Report of even date to the members of Span Divergent Limited("the Company") on the standalone Ind AS financial statements for the year endedMarch 31 2019]

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) During the year fixed assets have not been physically verified by the management.However there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets.

(c) The title deeds of immovable properties recorded as fixed assets in the books ofaccount of the Company are held in the name of the Company.

(ii) There was no inventory during the year. Therefore clause 3 (ii) of the Order isnot applicable to the Company.

(iii) As informed the Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Act. Accordingly clauses 3 (iii)(a) 3 (iii)(b) and 3(iii)(c) of the Order are not applicable to the Company.

(iv) Based on information and explanation given to us in respect of loans investmentsguarantees and securities the Company has complied with the provisions of sections 185and 186 of the Act.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the provisions of sections 73to 76 of the Act and the rules framed there under.

(vi) The Central Government has not prescribed the maintenance of cost records for anyof the products of the Company under sub-section (1) of section 148 of the Act and therules framed there under.

(vii) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insurance incometax goods and service tax customs duty cess and any other material statutory duesapplicable to it however there have been slight delay in few cases. According to theinformation and explanations given to us no undisputed amounts payable in respect ofprovident fund employees' state insurance income tax goods and service tax customsduty cess and any other material statutory dues applicable to it were outstanding atthe year end for a period of more than six months from the date they became payable.

(b) According to the information and explanation given to us there are no dues withrespect to income tax sales tax service tax value added tax goods and service taxcustoms duty and excise duty which have not been deposited on account of any dispute.

(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowings to banks.

(ix) The Company has neither raised money by way of public issue offer nor has obtainedany term loans. Therefore clause 3(ix) of the Order is not applicable to the Company.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by the Company or any fraud on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such instance by themanagement.

(xi) According to the information and explanations given to us managerial remunerationhas been paid / provided in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Therefore clause 3(xii) of the Order is not applicable tothe Company.

(xiii)According to the information and explanation given to us all transactionsentered into by the Company with the related parties are in compliance with sections 177and 188 of Act where applicable and the details have been disclosed in the standalone IndAS financial statements etc. as required by the applicable accounting standards.

(xiv)The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Therefore clause3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him duringthe year.

(xvi)According to the information and explanation given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For Haribhakti & Co.LLP

Chartered Accountants

ICAI Firm Registration No.103523W/W100048

Hemant J. Bhatt

Partner

Membership No.036834

Place: Surat

Date: May 17 2019

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'in the Independent Auditor's Report of even date to the members of Span Divergent Limitedon the standalone Ind AS financial statements for the year ended March 31 2019]

Report on the Internal Financial Controls with reference to Financial Statements underclause (i) of sub-section 3 of section 143 of the Companies Act 2013 ("theAct")

We have audited the internal financial controls with reference to financial statementsof Span Divergent Limited("the Company") as of March 31 2019 in conjunctionwith our audit of the standalone Ind AS financial statements of the Company for the yearended 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 with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing specified under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth issued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit too btain reasonable assurance aboutwhether adequate internal financial controls with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness.

Our audit of internal financial controls with reference to financial statementsincluded obtaining an understanding of internal financial controls with reference tofinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal controls based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the 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 controls withreference to financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles.

A company's internal financial control with reference to financial statements includesthose policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the company;(2)provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; 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 with reference to FinancialStatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls withreference to financial statements were operating effectively as at March 31 2019 basedon the internal control with reference to financial statements criteria established by theCompany considering the essential components of internal controls stated in the GuidanceNote issued by the ICAI.

For Haribhakti & Co.LLP

Chartered Accountants

ICAI Firm Registration No.103523W/W100048

Hemant J. Bhatt

Partner

Membership No.036834

Place: Surat

Date: May 17 2019

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