To the Members Starcom Information Technology Limited Report on the Audit of the Ind ASFinancial Statements
We have audited the Ind AS financial statements of Starcom Information TechnologyLimited ("the Company") which comprise the balance sheet as at 31st March 2019and the statement of Profit and Loss (Including Other Comprehensive Income) statement ofcash flows and statement of changes in equity for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us except the possible effects of the matter described in the Basis forQualified Opinion paragraph the aforesaid financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at March 31 2019 and its profit (Financial performance including othercomprehensive income) its cash flows and changes in equity for the year ended on thatdate.
Basis for Qualified Opinion
The Company have an overdue statutory dues as on 31st March 2019 in respect of SalesTax / Service Tax / Goods and Service Tax of Rs. 223.81 lacs (including interest of Rs.72.21 lacs) Provident Fund / ESIC / Professional Tax of Rs. 122.56 lacs (includinginterest of Rs. 34.75 lacs) and Tax Deducted at Source of Rs. 366.36 lacs (includinginterest of Rs. 110.34 lacs). Though the Company has provided for interest upto 31stMarch 2019 in respect of these liabilities any other consequential impacts as per therespective laws are not ascertained at present. Accordingly We are unable to comment uponthe resultant effect of same on the Assets Liability and Loss of the company.
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 Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our qualified opinion.
Key Audit Matters
1. Key audit matters are those matters that in our professional judgment were ofmost significance in our audit of the financial statements of the current period. Thesematters were addressed in the context of our audit of the financial statements as a wholeand in forming our opinion thereon and
We do not provide a separate opinion on these matters. During the course of our auditwe have determined that there are no key audit matters to be communicated in our reportexcept for the matter described in the Basis for Qualified opinion section.
Information Other than the Financial Statements and Auditor's Report Thereon
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 Report on Corporate governance and Business Responsibility report but doesnot included in the financial statements 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 during thecourse of our audit or otherwise appears to be materially misstated. If based on the workwe have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
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 financial statements that give a true and fair view of the financial positionfinancial performance including other comprehensive income cash flows and changes inequity of the Company in accordance with the Ind AS and accounting principles generallyaccepted in India including the accounting Standards / IND AS specified under section 133of the Act. 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 financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
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.
That Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
1. 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 with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
2. As part of an audit in accordance with SAs we exercise professional judgmentand maintain professional skepticism throughout the audit. We also : Identify and assessthe risks of material misstatement of the financial statements whether due to fraud orerror design and perform audit procedures responsive to those risks and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control.
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 theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness 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 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.
Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
3. We communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
4. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
5. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1 As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Companies Act 2013 we give in the Annexure 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 andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit.
(b) Except the possible effects of the matter described in the Basis for QualifiedOpinion paragraph in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.
(c) The Ind AS financial statements dealt with by this Report are in agreement with thebooks of account.
(d) Except the possible effects of the matter described in the Basis for QualifiedOpinion paragraph in our opinion the aforesaid financial statements comply with theAccounting Standards / IND AS as specified under Section 133 of the Act read with Rule 7of the Companies (Accounts) Rules 2014. (e) The matter described in the Basis forQualified Opinion paragraph above in our opinion may have an adverse impact on thefunctioning of the Company.
(f) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the disqualified directorsas on 31st March 2019 from being appointed as a director in terms of Section 164 (2) ofthe Act.
(g) 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".
(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. TheCompany has disclosed the impact of pending litigations if any on its financial positionin its financial statements (Refer Note 29 of the Ind AS Financial Statements); ii. TheCompany did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses. iii. There have been no delays intransferring amounts which were required to be transferred to the Investor Education andProtection Fund by the company.
3. In our opinion and according to the information and explanations given to us theCompany has not paid/provided for any managerial remuneration accordingly the provisionsof Section 197 read with Schedule V to the Act are not applicable to the Company.
For CAS & Co.
Mem. No. 131146
Place: Mumbai Date: May 30 2019.
Annexure "A" to the Independent Auditor's Report
Annexure referred to in Paragraph 1 of "Report on Other Legal and RegulatoryRequirements" of our Independent Auditor's Report of even date to the members of StarcomInformation Technology Limited("the company") on the Ind AS financialstatements for the year ended 31 st March 2019.
As required by the Companies (Auditors Report) Order 2016 and according to theinformation and explanations given to us during the course of the audit and on the basisof such checks of the books and records as were considered appropriate we report that: (i)a) The company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
b) As explained to us the fixed assets have been physically verified by the managementin accordance with a phased programme of verification which in our opinion is reasonableconsidering the size of the Company and the nature of its assets. In accordance with thisprogram certain fixed assets were verified during the year. The frequency of verificationis reasonable and no discrepancies have been noticed on such physical verification. c)According to the information and explanations given to us the company does not hold anyimmovable property.
(ii) The inventories have been physically verified by the Management during the year atreasonable intervals. Discrepancies noticed verification physical of inventories ascompare to books of records were not material and have been properly dealt with the booksof accounts.
(iii) During the year the Company has not granted any loans whether secured orunsecured to any parties covered in the register maintained under section 189 of theCompanies Act 2013. Hence paragraph 3 (iii) (a) (b) and (c) of the Order are notapplicable to the Company.
(iv) In our opinion and according to the information and explanation given to ussection 185 and section 186 of the Companies Act 2013 is not applicable since theCompany has neither granted any loan nor made any investment in any securities or givenany guarantees or security in/or body corporate. (v) According to the informationand explanations given to us and on the basis of our examination of records the Companyhas not accepted any deposits from public within the provision of section 73 to 76 of theAct and ruled framed there under.
(vi) The Central Government has not prescribed for the maintenance of cost record underSection 148(1) of the Act.
(vii) a) According to the records of the Company amount deducted/accrued in the booksof accounts in respect of the undisputed statutory dues including Provident FundEmployee's State Insurance Income tax Sales tax Service tax Duty of Customs Duty ofExcise Value Added Tax Goods and Service Tax Cess and other Statutory Dues to theextent applicable to the Company have not been regularly deposited with the appropriateauthorities. Undisputed amounts payable in respects thereof which were outstanding as at31st March 2019 for a period more than six months from the date they becamepayable are as follows:
|Name of the Statue ||Nature of dues ||Amount (Rs) |
|The Income Tax Act 1961 ||Tax Deduction at Source (TDS) ||25602688 |
|Finance Act 1994 ||Service Tax ||2508616 |
|The Employee's Provident fund and Miscellaneous Provisions Act 1952 ||Provident Fund ||8214754 |
|Central Sales Tax 1956 ||Central Sales Tax Karnataka ||1800028 |
|Karnataka VAT2003 ||Value Added Tax ||232282 |
|Central Sales Tax 1956 ||Central Sales Tax Delhi ||2157561 |
|The Central Goods and Service Tax Act 2017 ||Goods and Service tax ||8461281 |
|The Karnataka Tax on Professions Trades Callings and Employment Act 1976 ||Professional Tax ||257500 |
|Employees' State insurance Act1948 ||Employee State insurance ||309629 |
b) According to the information and explanations given to us there are no dues withrespect to Income Tax Sales Tax Service Tax Duty of Custom Duty of Excise and ValueAdded Tax which have not been deposited on account of dispute.
(viii) As per the information and explanations given by the management the Company hasno facilities from banks financial institutions and has not issued debentures.
(ix) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) or term loans.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with generally accepted auditing practices in India andaccording to information and explanation 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 instances bythe management.
(xi) According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has not paid / provided for anymanagerial remuneration. Hence paragraph 3(xi) of the Order is not applicable to thecompany.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3 (xii) of the Order is notapplicable to the Company.
(xiii) According to the information and explanation given to us and based on ourexamination of the records of the Company all transactions entered into by the Companywith the related parties are in compliance with section 177 and company had not enteredinto any transaction which are covered under section188 of Companies Act 2013.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year. (xv) According to theinformation and explanation given to us and based on our examination of the records of theCompany the Company has not entered into any non-cash transactions with the directors orpersons connected with him during the year. Accordingly paragraph 3 (xv) of the Order isnot applicable. (xvi) In our opinion and according to the information and explanationgiven to us the Company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934.
For CAS & Co.
Firm's Reg. No. 111075W
Mem No: 131146
Place : Mumbai Date : 30th May 2019
Annexure "B" to the Independent Auditor's Report of even date on the Ind ASfinancial statements of Starcom
Information Technology Limited for the year ended 31st March 2019.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of StarcomInformation Technology Limited ("the Company") as of March 31 2019 inconjunction with our audit of the 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 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 businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that We comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial 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 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 controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
According to the information and explanation given to us and based on our audit thefollowing material weakness has been identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at 31stMarch 2019: The documentation in respect of specific policies and procedures and the ITControls pertaining to internal financial controls over financial reporting are notadequate and needs to be further strengthened. This may potentially result in the risk ofoverriding of these controls and misstatement in recording of transaction.
A "material weakness" is a deficiency or a combination of deficiencies ininternal control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the Company's annual or interim financial statements willnot be prevented or detected on a timely basis.
In our opinion except for the possible effect of the material weakness described aboveon the achievement of the objectives of the control criteria the Company has maintained in all material respects an adequate internal financial controls system over financialreporting and such internal financial controls over financial reporting were operatingeffectively as at March 31 2019 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India.
We have considered the material weaknesses identified and reported above in determiningthe nature timing and audit tests applied in our audit of the financial statements of theCompany and these material weaknesses above does not affect our opinion on the Ind ASfinancial statements of the Company.
For CAS & Co.
Firm's Reg. No. 111075W
Mem. No. 131146
Place : Mumbai Date : 30th May 2019