Trend Electronics Ltd.
|BSE: 517228||Sector: Consumer|
|NSE: N.A.||ISIN Code: INE219F01017|
|BSE 00:00 | 16 Apr||Trend Electronics Ltd|
|NSE 05:30 | 01 Jan||Trend Electronics Ltd|
|BSE: 517228||Sector: Consumer|
|NSE: N.A.||ISIN Code: INE219F01017|
|BSE 00:00 | 16 Apr||Trend Electronics Ltd|
|NSE 05:30 | 01 Jan||Trend Electronics Ltd|
The Members of
Trend Electronics Limited
Report on the Audit of the Financial Statements
We have audited the accompanying financial statements of Trend Electronics Limited("the Company") which comprise the Balance Sheet as at March 312019 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date andnotes to the financial statements including a summary of the significant accountingpolicies and other explanatory information (hereinafter referred to as "the financialstatements").
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph of our report the aforesaid financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 312019and its loss total comprehensive loss changes in equity and its cash flows for the yearended on that date.
Basis for Qualified Opinion
a) As mentioned in Note No. 47 (a) the Company has not assessed impairment of fixedassets (b) the Company has not ascertained net realisable value of inventory and (c) theCompany has not ascertained the realisable value of investments.The ResolutionProfessional ("RP") has appointed two valuers for valuation of assets includinginventory and investments. According to RP there is a significant difference between bookvalue and realisable value of Fixed Assets inventories and investments. However thereports if any have not been made available to us and the impact thereof is notascertained by the Company.
b) As mentioned in Note No. 48 to the financial statements the balance confirmationshave not been received in respect of certain secured and unsecured loans balances withbanks trade receivables trade and other payables and loans and advances. The Companycontinues the process of obtaining confirmations and reconciliation of the balances oftrade receivables trade and other payables and loans and advances. The impact of the sameis not ascertainable at present.
The auditor's report for the preceding financial year included this matter as"Emphases of Matter".
c) As mentioned in Note No. 46 of the financial statements the Company has madeinvestments given advances and has trade receivables aggregating to Rs. 2932.98 Millionin group/affiliate companies which have also been referred to National Company LawTribunal and have been admitted to Corporate Insolvency Resolution Process (CIRP) underthe Insolvency and Bankruptcy Code 2016 the extent of realisability of aforesaidinvestments advances and trade receivables from these group/affiliate companies is notascertainable till the completion of resolution process of these entities. Theconsequential effect of the above on the financial statements for the year ended March31 2019 is not ascertainable.
d) As mentioned in Note No. 49 to the financial statements pursuant to commencement ofCorporate Insolvency Resolution Process (CIRP) of the Company under Insolvency andBankruptcy Code 2016 there are various claims submitted by the financial creditorsoperational creditors and employees to the RP. Such claims can be submitted to the RPtill the approval of the resolution plan by CoC. The overall obligations and liabilitiesincluding interest on loans and the principal amount of loans shall be determined duringthe CIRP. Pending final outcome of the CIRP no accounting impact in the books of accountshas been made in respect of excess short or non-receipts of claims for operational andfinancial creditors. Hence consequential impact if any is currently not ascertainable.
e) No determination and disclosures in respect of the dues and interest payable toMicro Small and Medium Enterprises as required under The Micro Small and MediumEnterprises Development Act 2006 has been made or given and according to RP the Companybeing under CIRP claims of all creditors including MSME will be treated as per approvedresolution plan.
f) The Company has not submitted its financial results for the period ended 31st March2018 and subsequent periods till date as prescribed under regulation 33 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
Consequently we are unable to comment on the impact if any of these non-compliances onthe financial statements.
g) Material uncertainty relating to Going Concern:
As mentioned in Note No. 45 to the financial statements the Company has been referredto National Company Law Tribunal under the Insolvency and Bankruptcy Code 2016 and thereare persistent severe strains on the working capital and there is considerable decline inlevel of operations of the Company and net worth of the Company as on the reporting dateis negative and it continues to incur losses. The Company has received invocation noticesof corporate guarantees given by it and also the personal guarantees of promoter directorshave been invoked. Since Corporate Insolvency Resolution Process (CIRP) is currently inprogress as per the Code it is required that the Company be managed as going concernduring CIRP. Accordingly the financial statements are continued to be prepared on goingconcern basis. However there exists a material uncertainty about the ability of theCompany to continue as a "Going Concern". The same is dependent upon theresolution plan to be approved by NCLT. The appropriateness of the preparation offinancial statements on going concern basis is critically dependent upon CIRP as specifiedin the Code. necessary adjustments required on the carrying amount of assets andliabilities are not ascertainable at this stage.
The auditor's report for the preceding financial year was also qualified inrespect of this matter.
In respect of our observations at para (a) to (g) above we are unable to determine theadjustments that are necessary in respect of Company's assets liabilities as on Balancesheet date income and expenses for the year the elements making up the statement ofchanges in equity and cash flow statement and related presentation and disclosures infinancial statements.
Emphasis of Matter
Attention is drawn to Note No. 31(e) regarding non recognition of deferred tax assetsfor the current year. The Company has carried forward the balance of deferred tax assetsrecognised in earlier year.
Our opinion is not modified in respect of above matter.
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.Apart from the matters described in the Basis for Qualified Opinion paragraph and Materialuncertainty related to Going Concern section we have also determined the mattersdescribed below to be the key other audit matters to be communicated in our report
Information Other than the Financial Statements and Auditor's Report Thereon("Other Information")
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Directors' Report including Annexures to Directors' Report andCorporate Governance Report but does not include the financial statements and ourauditor's report thereon. The Board's Report including Annexures to Board's Report andCorporate Governance Report is expected to be made available to us after the date of thisauditor's report.
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 identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
When we read the Board's Report including Annexures to Board's Report if we concludethat there is a material misstatement therein we are required to communicate the matterto those charged with governance.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
The Company has been under the Corporate Insolvency Resolution Process (CIRP')under the provisions of the Insolvency and Bankruptcy Code 2016 (the Code') videorder dated 25th September 2018 passed by the National Company Law Tribunal(NCLT'). The powers of the Board of Directors stand suspended as per Section 17 ofthe Code and such powers are being exercised by the Resolution Professional (RP) appointedby the NCLT by the said order under the provisions of the Code. As per Section 20 of theCode the management and operations of the Company were being managed by InterimResolution Professional/Resolution Professional Mr. Dushyant C. Dave.
Subsequently NCLT Principal Bench on October 24 2018 directed to transfer allinsolvency petitions related to certain Videocon group/ affiliate entities to one bench atNCLT Mumbai and left open the matter of substantive consolidation to be decided by NCLTMumbai bench.
Further State Bank of India had filed a petition at NCLT Mumbai bench for substantiveconsolidation of CIRP of group/affiliate entities.
The NCLT Mumbai Benchhas passed an Order on August 8 2019 approving Consolidation ofCIRP of 13 Videocon Group/affiliateentities ("Consolidation Order"). TrendElectronics Limited ("Trend") is kept out of consolidation considering thatTrend business of manufacturing set top boxes is independent of other Videocongroup/affiliateentities businesses. The Hon'ble Bench appointed Mr. Divyesh Desai InterimResolution Professional (IRP) of Trend effective from the date of Consolidation Order.NCLT Mumbai has granted a time of 180 days from Order dated August 8 2019 to the IRPto complete CIRP of Trend.
Committee of Creditors (CoC) in its meeting held on September 6 2019 approvedappointment of IRP as Resolution Professional ("RP")of Trend. Therefore themanagement and operations of the Company are being managed by Resolution Professional Mr.Divyesh Desai.
The Company's management/RPis responsible for the matters stated in Section 134(5) ofthe Act with respect to the preparation of these financial statements that give a true andfair view of the state of affairs profit and other comprehensive income changes inequity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) specifiedunder Section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement 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.
The management/RP is also responsible for overseeing the Company's financial reportingprocess.
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 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.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act 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 reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
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
A. As required by the Companies (Auditor's Report) Order 2016 ("the
Order") issued by the Central Government of India in terms of subsection (11) ofsection 143 of the Act we give in the Annexure A' a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
B. 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 except for thematters described in the Basis of Qualified Opinion above.
b) Except for the possible effects of the matters described in the Basis of Qualifiedopinion paragraph above in our opinion 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 Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with Companies (Indian Accounting Standards) Rules2015 as amended except requirement of Ind AS 36 on Impairment of Assets Ind AS 37 onProvisions Contingent Liabilities and Contingent Assets Ind AS 113 Fair ValueMeasurement and Ind AS 2 Inventories with regard to matters described in the Basis ofQualified Opinion paragraph above.
e) The matters described under the basis for qualified opinion paragraph andMaterial Uncertainty Related to Going Concern paragraph above in our opinion may havean adverse effect on functioning of the Company and on the amounts disclosed in financialstatements of the Company.
f) We have not received any written representations from the directors as on March312019 with regard to disqualification from being appointed as a director in terms ofSection 164(2) of the Act. Accordingly we are unable to comment as to whether any of thedirectors is disqualified as on 31st March 2019 from being appointed as a director interms of Section 164 (2) of the 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' and
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 as at March 312019 onits financial position in its financial statements - Refer Note 36 37 38 and 44 to thefinancial statements.
ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses - Refer Note 50
iii. The Company has defaulted in transferring amount of Rs. 0.43 Million required tobe transferred to the Investor Education and Protection Fund during the year ended March312019.
C. 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 according to the information and explanations given to us theCompany has not paid any remuneration to its directors during the year. The remunerationpaid to any director is not in excess of the limit laid down under Section 197 of the Act.The Ministry of Corporate Affairs has not prescribed other details under Section 197(16)which are required to be commented upon by us.
ANNEXURE A' TO THE INDEPENDENT AUDITOR'S REPORT
The Annexure A' referred to in Independent Auditor's Report to the Members of theTrend Electronics Limited (the Company') on the financial statements for the yearended March 31 2019 we report the following:
(i) In respect of fixed assets:
(a) We have not been given the records maintained by the Company showing fullparticulars including quantitative details and situation of fixed assets.Hence we areunable to comment on the completeness of the records of fixed assets.
(b) We have been informed that a physical verification and valuation of fixed assetshas been carried out by external agencies. However we have not been given any suchreport. Hence we are unable to comment as to whether there is any material discrepancieson physical verification. In our opinion the frequency of verification is notsatisfactory having regard to the size of the Company and nature of its business.
(c) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
(ii) (a) As per the information and explanation given to us and as mentioned at part(a) of the Basis of Qualified Opinion paragraph in the main report the inventories havebeen physically verified during the period by the valuers appointed by the RP However noreport has been made available to us. In our opinion having regard to the nature andlocation of stocks the frequency of the physical verification is not reasonable.
(b) As per information and explanation given to us the Company has appointed Valuersfor verification of inventory and its valuation who has identified shortages damages andnon moving items and there are huge difference between the book carrying value and therealisable value of the inventory (the quantum of which has not been disclosed to us bythe RP) which has not yet been adjusted in the books of accounts.
(iii) As per information and explanation given to us the Company has not granted anyloans secured or unsecured to companies firm limited liability partnerships or otherparties covered in the register maintained under Section 189 of the Act.
(iv) In our opinion and according to the information and explanation given to us theCompany has complied with the provisions of Section 185 and 186 of the Act in respect ofloans investments guarantees and security.
(v) According to the information and explanations given to us the Company has notaccepted any deposit during the period. Therefore the provisions of clause (v) of theOrder is not applicable.
(vi) According to the information and explanations given to us in our opinion theCompany has prima facie made and maintained the prescribed cost records pursuant to theCompanies (Cost Records and Audit) Rules 2014 as amended and prescribed by the CentralGovernment under section 148(1) of the Companies Act 2013. We have however not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.
(vii) (a) According to the information and explanations given to us and the recordsexamined by us the Company is regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income tax goods and service tax sales taxservice tax duty of customs duty of excise value added tax cess and other statutorydues with appropriate authorities except that undisputed arrears of following statutorydues were outstanding as on March 31 2019 for a period of more than six months from thedate they became payable and not paid till date:
(b) Except for the effects of the matters described in the basis for disclaimer ofopinion paragraph in main report and according to the information and explanation given tous and on the basis of our examination of the records of the Company details of dues ofincome tax goods and service tax sales tax service tax custom duty excise duty valueadded tax cess which have not been deposited as on March 312019 on account of disputesare given below:
(viii) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company we observed that the Company has defaulted inrepayment of interest and principal amount of all loans to financial institutions andbanks. The default runs into more than 365 days.
The Company has not borrowed from government and has not issued any debentures duringthe year.
(ix) According to the information and explanations given to us the Company has notraised money by way of initial public offer or further public offer (including debtinstruments) or term loans during the year.
(x) According to the information and explanations given to us no material fraud by theCompany or any fraud on the Company by its officers or employees has been noticed orreported during the period.
(xi) The Company has not paid or provided the managerial remuneration to any of itsDirector.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.
(xiii) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company we observed that transactions with the relatedparties are in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable and the details have been disclosed in the financial statements etc. asrequired by the applicable accounting standards.
(xiv) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company we observed that the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the period.
(xv) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company we observed that the Company has not enteredinto any non-cash transactions with its directors or persons connected with him and henceprovisions of section 192 of the Companies Act 2013 are not applicable.
(xvi) In our opinion the Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934. Therefore the Clause (xvi) of paragraph 3 of theOrder is not applicable to the Company.
ANNEXURE B' TO THE INDEPENDENT AUDITOR'S REPORT
Report on the Internal Financial Controls Over under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013 ("the Act")
We were engaged to audit the internal financial controls over financial reporting ofTrend Electronics Limited (the Company') as of March 31 2019 in conjunction withour audit of the financial statements 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 Reporting (theGuidance Note) issued by the Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
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 and the Standards on Auditing prescribed under Section 143(10) ofthe Act to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 judgment 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 explanations given to us and based on our audit thefollowing material weaknesses have been identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at March 312019:
(a) Non-compliance of the requirements of Companies Act 2013 and Securities andExchange Board of India (Listing Obligation and Disclosure Requirements) Regulation 2015with regard to preparation of periodical Financial results from quarter ended 31st March2018 till date.
(b) Deficiencies in maintenance of books of accounts and documentation for stand takenby the management for items described in Basis for Qualified Opinion paragraph (a) to (g)of our main report.
(c) Deficiencies in non-assessment of impact of Indian Accounting Standards (Ind AS)for items described in Basis for qualified opinion paragraph (a) of our main report.
(d) Statutory dues (Goods and Service Tax/Value Added Tax/Tax Deducted at Source)accounts are in the process of reconciliation and there are delays in filing of certainstatutory returns with the respective authorities. Company needs to strengthen internalcontrol system in this regard.
A material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the Company's annual or interim financialstatements will not be prevented or detected on a timely basis. In our opinion except forthe effects/possible effects of the material weaknesses described above under QualifiedOpinion paragraph on the achievement of the objectives of the control criteria theCompany has in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at March 31 2019 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the ICAI.
We have considered material weakness identified and reported above in determining thenature timing and extent of audit tests applied in our audit of the March 31 2019financial statements of the Company and these material weaknesses affect our opinion onfinancial statements of the Company for the year ended March 31 2019 [our audit reportdated December 17 2019 which expressed a qualified opinion on those financial statementsof the Company].