Report on the Audit of the Financial Statements Opinion
We have audited the accompanying financial statements of Data Patterns (India) Limited (the "Company”), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date and a summary of significant accounting policies and other explanatory information (hereinafter referred to as the "financial statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 the 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, 2023 and its profit, total 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 financial statements in accordance with the Standards on Auditing ("SA”s) 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 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 financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the 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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No.
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Key Audit Matter
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Auditor's Response
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1.
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Revenue recognition from contracts with customers
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Our audit procedures, among others included the following:
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as per Ind AS 115:
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• We reviewed the Company's revenue recognition policy
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Refer Note 1 (Accounting policy) and Note 24 to
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to ensure whether it is in compliance with Ind AS 115.
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financial statements
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• We understood the nature of goods sold / services
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During the financial year ended March 31, 2023, the Company has recognised revenue of Rs. 453.45 crores with respect to sale of goods and services.
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rendered to the customers, assessed the design and tested the operating effectiveness of internal controls related to revenue recognition.
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No.
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Key Audit Matter
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Auditor's Response
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The Company recognizes revenue based on the terms of the contract with customers. Terms of sales arrangements with various customers including incoterms determine the timing of transfer of control and require judgment in determining timing of revenue recognition.
Due to the judgement relating to determination of point of time in satisfaction of performance obligations, this matter is considered as Key Audit Matter.
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• We performed the following tests for a sample of
transactions pertaining to sale of goods or services
during the year:
a. Tested supporting documentation including sales invoices, customer contracts/sales orders, shipping documents and other related records.
b. Verified the terms of the contract and confirmed whether the performance obligations stipulated under the contract are the same as identified by the company.
c Verified whether the amount of revenue recognized is based on the transaction price identified to the performance obligation satisfied as per the contract.
d Verified whether the recognition of revenue is in accordance with the incoterms / when the conditions for revenue recognitions are satisfied.
e. Verified whether the performance obligation is satisfied at a point in time or over a period of time as per the terms of the contract.
f. Tested the supporting documentation for significant value of sale transactions recorded during the period closer to the year end to ensure revenue recognition criteria is met as per Ind AS 115.
g. Assessed the relevant disclosures made in the financial statements.
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2
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Impairment of Trade Receivables:
Refer Note 1 (Accounting policy) and Note 7 to financial statements
Trade receivables as at March 31, 2023 is Rs 382.48 crores which constitutes around 27% of the total assets of the company.
Significant portion of balances outstanding under trade receivables are from Government customers / Public sector undertakings.
Considering the nature of the product and services, detailed procedures involved in acceptance of the same by customers may take substantial time and therefore assessing the recoverability of trade receivables involves significant amounts of judgement. Hence, we have considered this as a Key Audit Matter.
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Our audit procedures, among others included the following:
• We assessed the design and tested the operating effectiveness of internal controls related to the processes in place for recoverability of customer dues.
• We reviewed the trade receivables and evaluated the basis for management's conclusion regarding the recoverability of the same based on the evidence supporting the completion of performance obligation and the reasons for the delays in recovery.
• We have also obtained the status of long pending receivables based on communications with the customers and subsequent collections (if any).
• We assessed the relevant disclosures made in the financial statements
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No.
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Key Audit Matter
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Auditor's Response
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3
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Inventory Valuation:
Refer Note 1 (Accounting policy) and Note 5 to financial statements
Inventories held as at March 31, 2023 is Rs 192.95 crores which constitutes around 13% of the total assets of the company.
Considering the nature of the inventories, its valuation involves significant management judgement in identification and allocation of cost of conversion to work in progress and finished goods, identification of obsolete inventories and hence we considered this to be a Key Audit Matter.
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Our audit procedures, among others included the following:
• We assessed the design and tested the operating effectiveness of internal controls related to Inventory management.
• We assessed whether the policy and frequency of physical verification of inventory implemented by the Company is reasonable and adequate.
• We observed the physical verification of inventory as part of yearend audit procedure and applied roll back / roll forward procedure to validate the year end balance.
• We checked the valuation of material cost of inventories at the yearend on a sample basis to ensure whether the same is in line with the accounting policy adopted by the company.
• We verified the methodology of allocation and absorption of conversion cost on the closing inventory and ensured its reasonableness.
• We tested the operating effectiveness of internal controls related to identification and provisioning / write off of obsolete inventories.
• We assessed the relevant disclosures made in the financial statements.
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Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Board's Report including Annexures to Board's Report but does not include the financial statements and our auditor's report thereon.
Our opinion on the 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 financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained during the course of our 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.
Management's Responsibilities for the 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 financial statements that give a true and fair view of the financial position, financial performance, including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, Management is 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the 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's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act, based on our
audit 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.
c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act.
e) On the basis of the written representations received from the directors, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023, from being appointed as a director in terms of Section 164(2) of the Act.
f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal financial controls over financial reporting.
g) With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of section 197(16) of the Act, as
amended: In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, 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 financial statements - Refer note no 33 to financial statements.
ii. The Company has certain long-term contracts for which there are no material foreseeable losses. The Company did not have any derivative contracts.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. (a) The Management has represented that,
to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) 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 person or entity, including foreign entity ("Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities 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;
(b) The Management has represented, that, to the best of its knowledge and
belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities 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;
(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
v. (a) The final dividend paid by the Company during the financial year in respect of the dividend declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend.
(b) As stated in note 46 (c) to the financial statements, the Board of Directors of the
Company have proposed final dividend for the financial 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.
vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31,2023.
2. As required by the Companies (Auditor's Report) Order, 2020 (the "Order”) issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.
Place: Chennai For R.G.N. Price & Co
Date: May 13, 2023 Chartered Accountants
FR No.002785S
K. Venkatakrishnan
Partner
Membership No.208591 UDIN: 23208591BGYOKQ7187
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