The Members of AVANTEL Limited
Report on the Audit of the Financial Statements Opinion
We have audited the financial statements of Avantel Limited ("the Company")which comprise the balance sheet as at 31st March 2019 and the statement of profit andloss statement of changes in equity and statement of cash flows for the year then endedand notes to the financial statements including a summary of significant accountingpolicies 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 theCompanies Act 2013 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 changes in equity and its cash flows for theyear ended on that date.
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 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 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.
|Key Audit Matter ||How the Matter was addressed in Audit |
|Fair value assessment of trade receivables Trade receivables comprise a significant portion of the liquid assets of the Company. The trade receivables are mostly dues receivable from Government and allied Government agencies hence not impaired. There was no provision made on the trade receivable in the previous year. The most significant portion of the trade receivables less than one year comprises which are dues from Government and Government agencies hence not impaired. Accordingly the estimation of the allowance for trade receivables is a significant judgment area and is therefore considered a key audit matter. ||We assessed the validity of material long outstanding receivables which are Nil by reviewing the customer ledger during current year. We also considered payments received subsequent to year-end and unusual patterns if any were reviewed to identify potentially impaired balances. The assessment of the appropriateness of the allowance for trade receivables comprised a variety of audit procedures across the Group including: Challenging the appropriateness and reasonableness of the assumptions applied in the directors' assessment of the receivables allowance; Consideration and concurrence of the agreed payment terms; Verification of receipts from trade receivables subsequent to year-end; and Considered the completeness and accuracy of the disclosures. To address the risk of management bias we evaluated the results of our procedures against audit procedures on other key balances to assess whether or not there was an indication of bias. We were satisfied that the Company's trade receivables are fairly valued and no provision is deemed to be required against these receivables. |
|Revenue recognition ||Our audit procedures in respect of this area included: |
|The Company applies judgment to determine whether each goods software product or services promised to a customer are capable of being distinct and are distinct in the context of the contract if not the promised goods software product or services are combined and accounted as a single performance obligation. The Company allocates the arrangement consideration to separately identifiable performance obligation deliverables based on their selling price determined in contract. The accuracy and of revenue amounts recorded is an inherent industry risk Disclosures relating revenue recognition are in Note 21 ||We evaluated the effectiveness of key controls over the capture and measurement of revenue transactions across all material revenue streams Testing controls over software product sales including: documentation evidencing internal and third party physical inspection and confirmation of complete status; We evaluated the adequacy of the disclosures included in Note 21 |
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the other information included in Management Discussion andAnalysis Board's Report including Annexures to Board's Report Business ResponsibilityReport Corporate Governance and Shareholder's Information but does not include thefinancial statements and our auditor's report theron and we do not express any form ofassurance conclusion 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 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 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 the Board of Directors 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 unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic 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 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 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.
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) ofthe Companies 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.
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 withthose charged with governance we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits 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 andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit. b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books c) The Balance Sheet the Statement of Profit and Loss theStatement of Changes in Equity and the Cash Flow Statement dealt with by this Report arein agreement with the books of account d) In our opinion the aforesaid standalonefinancial statements comply with the Accounting Standards specified under Section 133 ofthe Act read with Rule 7 of the Companies (Accounts) Rules 2014. e) On the basis of thewritten representations received from the directors as on 31st March 2019 taken on recordby the Board of Directors none of the directors is disqualified as on 31st March 2019from being appointed as a director in terms of Section 164(2) of the Act. f) With respectto the adequacy of the internal financial controls over financial reporting of the Companyand the operating effectiveness of such controls refer to our separate Report in"Annexure B" g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014 in our opinion and to the best of our information and according to the explanationsgiven to us: i. The Company does not have any pending litigations which would impact thefinancial statements; ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses; iii. There hasbeen no delay in transferring amounts required to be transferred to the InvestorEducation and Protection Fund by the Company.
For RAMANATHAM & RAO
Chartered Accountants Firm Reg. No: 002934S
Sd/- (K Sreenivasan)
Place: Hyderabad Partner Date : 07th May 2019 ICAI Membership No: 206421
Annexure A to the Independent Auditors' Report
The Annexure referred to in our Independent Auditors' Report to the members of theAvantel Limited on the Ind AS financial statements for the period ended 31stMarch 2019 we report that: 1.1 The Company is maintaining proper records showing fullparticulars including the Quantitative details and the situation of fixed assets. 1.2 Thefixed assets have been physically verified by the Management at reasonable intervals andaccording to the information and explanations given to us no material discrepancies werenoticed on such verification. In our opinion the periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its business. 1.3According to the information and explanations given to us and on the basis of ourexamination of the records of the company the title deeds of immovable property are heldin the name of company. In respect of immovable properties been taken on lease anddisclosed as property plant and equipment in the Ind AS financial statements the leaseagreements are in the name of the Company. 2.1 The inventory has been physically verifiedby the management during the year. In our opinion the frequency of such verification isreasonable. The company has maintained proper records of inventory. The discrepanciesnoticed on verification between the physical stock and book records were not material.
3.1 According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theAct. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of the order are notapplicable to the company.
4.1 In our opinion and according to the information and explanations given to us theCompany has not given any loans made investments or provided securities to companies andother parties listed under section185 and 186 of the Act. Accordingly the provisions ofclause 3(iv) of the order is not applicable to the company.
5.1 The Company has not accepted any deposits from the public within the meaning ofSections 73 to76 of the Act and rules framed thereunder.
6.1 In our opinion and according to the information and explanations given to us themaintenance of Cost records under section 148 (1) of the Act as prescribed by the CentralGovernment are not applicable to the Company. Accordingly the provisions of clause 3(vi)of the order is not applicable to the company. 7.1 According to the information andexplanations given to us and on the basis of our examination of the records the Companyis generally regular in depositing undisputed statutory dues including provident fundemployees state insurance income tax sales tax service tax Goods and Services Taxduty of customs duty of excise value added tax cess and other material statutory duesas applicable to the appropriate authorities have generally been regularly depositedduring the year by the Company with the appropriate authorities. According to theinformation and explanations given to us no undisputed amounts payable in respect ofprovident fund employees state insurance income tax sales tax service tax Goods andServices Tax duty of customs duty of excise value added tax cess and other materialstatutory were in arrears as at 31st March 2019 for a period of more than six months fromthe date they became payable. 7.2 According to the information and explanations given tous there are no material dues of income tax or sales tax or service tax or Goods andServices Tax or duty of customs or duty of excise or value added tax which have not beendeposited by the company on account of dispute. 8.1 According to the information andexplanations given to us the Company has not defaulted in the repayment of loans orborrowings to financial institutions and banks. The company did not have any outstandingloans or borrowings from financial institutions or Government and there are no dues todebenture holders during the year.
9.1 In our opinion and according to the information and explanations given to us theCompany has not raised moneys by way of initial public offer or further public offer(including debt instruments) and term loans. Accordingly paragraph 3(ix) of the Order isnot applicable.
10.1 To the best of our knowledge and according to the information and explanationsgiven to us no material fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the course of our audit.
11.1 According to information and explanation given to us and based on our examinationof records of the company the company has paid /provided for managerial remuneration withthe requisite approvals mandated by the provisions of section 197 read with Schedule V ofthe Act. 12.1 In our opinion and according to the information and explanations given tous the Company is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable to the company. 13.1 According to the information and explanations given to usand based on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the Ind AS financial statements asrequired by the applicable accounting standards. 14.1 According to the information andexplanations given to us and based on our examination of records of the company theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year. Accordingly paragraph 3(xiv) of the Orderis not applicable to the company.
15.1 According to the information and explanations given to us and based on ourexamination of records of the company the Company has not entered into non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable to the company. 16.1 According to the information andexplanations given to us the Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.
For RAMANATHAM & RAO
Chartered Accountants Firm Reg. No: 002934S
Place: Hyderabad Partner Date : 07th May 2019 ICAI Membership No: 206421
Annexure - B to the Independent Auditors' 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 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 AvantelLimited ("the Company") as of 31st March 2019 in conjunction with our audit ofthe Ind AS 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 Reportingissued 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 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls system overfinancial 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.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For RAMANATHAM & RAO
Chartered Accountants Firm Reg. No: 002934S
Place: Hyderabad Partner Date : 07th May 2018
ICAI Membership No: 206421