Quick Heal Technologies Limited
Report on the Audit of the Standalone Financial Statements OPINION
We have audited the accompanying standalone financial statements of Quick Heal Technologies Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2024, and the Statement of Profit and Loss, including Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including material accounting policy information and other explanatory information (hereinafter referred to as the "Standalone financial statements").
In our opinion and to the best of our information and according to the explanations given to us , the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, its profit other comprehensive income, changes in equity and its cash flows for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing
(SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the 'Auditor’s Responsibilities for the Audit of the Standalone Financial Statements’ section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("ICAI") together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our opinion.
EMPHASIS OF MATTER
We draw attention to the Note 40 (b) to the standalone financial statements which describes that the remuneration paid to the Managing Director and Joint Managing Director of the Company for the financial year ended March 31,2024, is in excess of the limits prescribed under Section 197 of the Companies Act, 2013 read with Schedule V to the Act, by ' 0.24 crores. Further, the remuneration paid exceeds the limit prescribed under regulation 17(6)(e) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, by ' 1.72 crores. The managerial remuneration paid in excess of the limits has been approved by the Board of Directors and the Company is in the process of placing the same before the shareholders for their approval in the forthcoming Annual General Meeting.
Our opinion is not modified in respect of the above matter.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the year ended March 31, 2024 (current year). These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
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Sr.
No
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Key Audit Matter
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How the Key Audit Matter was addressed in our audit
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1.
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Revenue from contract with customer's:
Refer the disclosures related to Revenue recognition in Note 23 to the accompanying Standalone Financial Statements.
Revenue from the sale of security software products is recognised when control of the goods is transferred to the customer at an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods.
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Our audit procedures in respect of this area include, but are not limited
to following:
1. Evaluated the Company’s accounting policies for revenue recognition (including incentives) and assessed its compliance with Ind AS 115 'Revenue from contracts with customers;
2. Obtained and reviewed contracts with customers and confirmed our understanding of the Company’s sales process, including design and implementation of controls and tested the operating effectiveness of these controls on a sample basis;
3. Reviewed the customer agreements, on a sample basis, to test the terms and conditions for sale of such products including identification of performance obligations and allocation of the transaction price to such performance obligation based on appropriate method, as applicable;
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Sr.
No
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Key Audit Matter
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How the Key Audit Matter was addressed in our audit
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The Application of Ind AS 115 involves certain key judgements relating to identification of performance obligations, determination of basis and its appropriateness for allocation of transaction price to the identified performance obligations; recognition of such identified performance obligations based on timing of satisfaction (i.e., over time or point in time).
Due to the significance of revenue and involvement of management judgments relating to identification of separate performance obligations, this is considered as a key audit matter.
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4. Discussed with management the key assumptions underlying the Company’s assessment of cost related to identified performance obligations and tested mathematical accuracy of the underlying data used for computation and calculations made by the Company;
5. In case of variable consideration, assessed management’s computations for accrual of discounts and incentives and on a sample basis compared the accruals made with the approved schemes and underlying documents;
6. Ensured that the actual discounts and incentives does not exceed the approved amount and it has been recorded in the correct accounting period; and
7. Evaluated the appropriateness of the disclosures made in the standalone financial statement in relation to revenue recognition as required by applicable accounting standards.
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2.
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Provision for expected credit loss for accounts receivables.
Refer Note 11 of the standalone financial statement.
The Company has total outstanding trade receivable amounting to ' 176.18 crore as at March 31, 2024 against which the Company has provided for ' 44.13 crore towards expected credit loss in the books of account.
We have identified provisioning for credit loss as a key audit matter as the calculation of credit loss provision is a complex area and requires management to make significant assumptions on customer payment behaviour and estimating the level and timing of expected future cash flows.
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We evaluated the judgement and estimation used by management in
recognising the expected credit loss provision.
Our procedures included, but were not limited to the following:
1. Obtained an understanding of the Company’s policy on assessment of expected credit loss against trade receivables, including design and implementation of controls, validation of management review controls and testing the operating effectiveness of these controls;
2. Verified accuracy of the aging of trade receivables for sample customer transactions;
3. Obtained management’s assessment and plan for recovery with respect to trade receivables outstanding for more than 365 days and corroborated the same;
4. Assessed the methodology applied for recognising expected credit loss against the trade receivables outstanding balances and verified the same based on historical collection data;
5. Tested the arithmetic accuracy and completeness of the expected credit loss provision performed by the Company; and
6. Assessed and validated the adequacy and appropriateness of the disclosures made by the management is as per the requirements of Ind AS 109 -’Financial Instruments’.
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INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
The Company’s Board of Directors is responsible for the other information. The other information comprises the Management Discussion and Analysis, Director’s Report, Corporate Governance report, Business Responsibility and Sustainability Report but does not include the standalone financial statements and our auditor’s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONE FINANCIAL STATEMENTS
The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting
Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, the Management and Board of Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company’s financial reporting process.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
We give in "Annexure A" a detailed description of Auditor’s responsibilities for Audit of the standalone Financial Statements.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditor’s Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of 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 the Company so far as it appears from our examination of those books except for the matters stated in the paragraph 2(h)(vi) below on reporting under Rule 11(g).
(c) The Balance Sheet, the Statement of Profit and Loss including other comprehensive income, the Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of accounts.
(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March 31,2024 taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2024 from being appointed as a director in terms of Section 164 (2) of the Act.
(f) The reservation relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 2(b) above on reporting under Section 143(3)(b) and paragraph 2(h)(vi) below on reporting under Rule 11(g).
(g) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure C”.
(h) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and 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 financial position in its standalone financial statements -Refer Note 35 to the standalone financial statements.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. Following are the instances of delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company:
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Sr.
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Date of
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Amount
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No of days
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No.
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Payment
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delay
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1
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09-1 1-2023
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1,32,095
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27
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iv. 1. The Management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other person(s) or entity(es) identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
2. The Management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any persons or entities, including foreign entities (Funding Parties), with the understanding, whether recorded in writing or otherwise, as on the date of this audit report, that the Company shall, directly or indirectly, lend or invest in other person(s) or entity(es) identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
3. Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, and according to the information and explanations provided to us by the Management in this regard nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (ii) of Rule 11 (e) as provided under (1) and (2) above, contain
any material mis-statement.
v. The final dividend paid by the Company during the year in respect of the same declared for the previous year is in accordance with section 123 of the Companies Act 2013 to the extent it applies to payment of dividend.
The Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend. (Refer Note 32 to the Standalone financial statements).
vi. Based on our examination, the Company has used an accounting software, for maintaining its books of account which has a feature of recording audit trail (edit log) facility, except that no audit trail feature was enabled at the database level during the year ended March 31,2024 in respect of Accounting Software to log any direct data changes. Further, the audit trail facility has been operated throughout the year for all relevant transactions recorded in the accounting software, except at the database level as stated above, in respect of which the audit trail facility has not operated throughout the year ended March 31, 2024 for all relevant transactions recorded in this accounting software as it was enabled only with effect from April 19, 2024. Further, during the course of our examination, we did not come across any instance of audit trail feature being tampered with, post enablement of the audit trail facility.
Based on our examination, the Company has used an accounting software which is operated by a third-party software service provider, for maintaining its payroll records. In the absence of independent service auditors report, we are unable to comment whether the software has a feature of recording audit trail (edit log) facility, nor are we
able to comment on whether the audit trail feature was enabled in the said software and operated throughout the year for all relevant transactions recorded in the software. We are further unable to comment as to whether there were any instances of the audit trail feature been tampered with.
3. In our opinion, according to information, explanations given to us, the remuneration provided for in the books of accounts by the Company to its Managing Director and Joint Managing Director for the year ended March 31, 2024 is in excess of the limits prescribed under section 197 of the Companies Act, 2013 read with Schedule V to the Act by ' 0.24 crores. However, as informed to us, the managerial remuneration paid/
payable in excess of the limits has been approved by the Board of Directors and the management of the Company intends to seek the requisite approvals of the shareholders at the forthcoming Annual General Meeting. Refer Note 40 (b) to the standalone financial statements.
For M S K A & Associates Chartered Accountants ICAI Firm Registration No. 105047W
Sd/-
Shraddha D Khivasara
Partner
Place: Membership No. 134285
Date: April 25, 2024 UDIN:24134285BKEZAQ8599
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