We have audited the accompanying standalone financial statements of FONE4 COMMUNICATIONS
(INDIA) LIMITED (“the Company”) which comprises the Balance Sheet as at 31 March 2024, the
Statement of Profit and Loss and Statement of Cash Flows for the year then ended, and notes to the
financial statements, including a summary of material accounting policies 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,
except for the possible effects of the matter described in the Basis for Qualified Opinion
section of our report, 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 accounting standards specified under section 133 of the Act, read with Rule 7 of
the Companies (Accounts) Rules, 2014 (as amended) and other accounting principles generally
accepted in India, of the state of affairs of the Company as at 31 March 2024 and loss and its cash
flows for the year ended on that date.
Basis for Qualified Opinion
Attention is invited to the following matters in the Notes to the Standalone Financial Statements:
i. the confirmations regarding the closing balances of trade receivables, trade payables
and loans & advances were not made available to us by the management in certain
cases. Therefore, we are unable to comment on whether those balances, as shown in
financial results, are correct or not.
ii. the Company has registered under the Employees Provident Fund Act, 1952 and
Employee’s State Insurance Act, 1948, however, the same has not been deducted and
deposited on the eligible employees. The impact of the same is not ascertainable.
iii. the Company has not complied with the provision of Income Tax Act, 1961 (“IT Act”) by
failing to file the Income Tax Return (“ITR”) under section 139 of the IT Act and Tax
Audit Report (“TAR”) under section 44AB of the IT Act for the assessment year 2022-23
and 2023-24. Accordingly, the company shall be liable to pay the applicable penalties
for non-filing of ITR and TAR as per provisions of the IT Act.
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section
143(10) of the Companies Act, 2013. 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 together with the ethical requirements that
are relevant to our audit of the standalone financial statements under the provisions of the
Companies Act, 2013 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 we have obtained is sufficient and appropriate to provide a basis for our qualified
opinion on the Standalone Financial Statements.
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Management and Board of Directors are responsible for the other information. The
other information comprises the information included in the Director's 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.
The Director's report is not made available to us at the date of this auditor's report. We have nothing
to report in this regard.
Managements and Board of Director's Responsibilities for the Standalone Financial Statements
The Company's Management and Board of Directors are 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 and cash flows of the Company in
accordance with the accounting standards specified under section 133 of the Act, read with Rule 7 of
the Companies (Accounts) Rules, 2014 (as amended) 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 of the assets of the Company and for
preventing and detecting frauds and other irregularities; selection and application of appropriate of
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
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 Standalone Financial Statement
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.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalone 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 control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies
Act, 2013, we are also responsible for expressing our opinion on whether the company has
adequate internal financial controls with reference to Standalone Financial Statements 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 and Board of Directors.
• Conclude on the appropriateness of the Management and Board of Directors use of the going
concern basis of accounting in preparation of standalone financial statements 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 standalone 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 standalone financial statements,
including the disclosures, and whether the standalone 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.
Emphasis of Matters
Without qualifying our opinion, we draw attention on the following matters;
(a) the Company has not maintained the adequate records for inventory lying as stock in trade.
However, a physical verification of stock was conducted by M/s Nishant Sebastian Jose,
Chartered Accountants as on 31 March 2024. The verification report, dated 29 May 2024, has
been submitted to us by the management. We have relied up on the aforesaid report.
(b) as per the inventory risk management policy introduced by the management during the year, a
provision of Rs. 576.67 lacs have been recognized on account of slow moving and/or non-moving
inventory in the books of account.
(c) the Company has failed to comply with the provision of tax deducted at source as per chapter
- An amount of Rs. 9.87 lacs was deducted at source till 31 March 2023, however, the same
has not yet been deposited to the authorities by the Company. Subsequently, TDS returns not
yet submitted for the same.
- An amount of Rs. 1.11 lacs has been deducted in respect of expenses incurred and Rs.
14.64 lacs has been deducted in respect of purchases made during the financial year 2023¬
24, however, the same has not yet been deposited to the authorities by the Company.
(d) the reconciliation of GST input tax credit between the credit lying in books and the credit available
in GSTR-2A at GST portal has been completed during the year. The consequent impact of the
same, an amount of Rs. 36.02 lacs have been taken to statement of profit and loss under the
head 'Rate and Taxes'.
(e) the reconciliation of software migration process between accounting database of previous legacy
package and current tally package (desktop version) was completed during the year. This process
led to the following adjustment in the books of accounts:
Inventory Adjustment: An error was found where inventories were duplicated, amounting to Rs.
18.50 lacs. To rectify this, the duplicated inventory amount was reversed by debiting the
respective vendors' accounts.
Account Balances Adjustment: It was found that there were both debit and credit balances
amounting to Rs. 5.23 lacs in the accounts of the same parties. These balances were netted off
against each other, to represent the net amounts owed to or by these parties.
(f) the Company had given advances amounting to Rs. 1,150.40 lacs during the course of business
wherein the Company is not able to track the progress of the work being assigned. Subsequently,
the management has issued legal notices to the respective parties as a recovery proceeding
against the advances being given.
(g) the Company had a credit facility of Rs. 170.00 lacs with ICICI Bank Limited, secured by creating
a charge on 2 (two) immovable properties owned by directors of the Company. As on the date of
notice, an aggregate amount of Rs. 171.56 lacs were outstanding against this loan. On 1
December 2023, the bank declared the loan as Non-Performing Assets (“NPA”) and subsequently,
attached one of the properties for recovery of the outstanding amount. Further, the notice for
symbolic possession was issued by the bank on 3 April 2024.
In response, the Company has applied to the Debt Recovery T ribunal-1 ("DRT") at Ernakulam to
challenge the property attachment process. The application was submitted on 22 April 2024.
Currently, the matter is pending for hearing before the DRT, and the next hearing date has not
been fixed yet.
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 Companies Act, 2013, we
give in the “Annexure A” 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, based on our audit we report, to the extent applicable
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 and the Statement of Cash Flow dealt
with by this Report are in agreement with the books of account.
(d) except for the possible effects of the matters described under the Basis for Qualified
Opinion paragraph, in our opinion, the aforesaid standalone financial statements comply with
the Accounting Standards specified under Section 133 of the Act read with Rule 7 of the
Companies (Accounts) Rules, 2014 (as amended).
(e) The matter described in sub-paragraph (a) to (g) under the Emphasis of Matters paragraph
above, in our opinion, may have an adverse effect on the functioning of the Company.
(f) On the basis of the written representations received from the directors as on 31 March 2024
taken on record by the Board of Directors, none of the directors is disqualified as on 31 March
2024 from being appointed as a director in terms of Section 164 (2) of the Act.
(g) With respect to the adequacy of the Internal Financial Control with reference to Standalone
Financial Statements of the Company and the operating effectiveness of such controls, refer
to our separate Report in the “Annexure B”.
(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 No. 27 to the standalone financial
statement;
ii. The Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company during the year ended 31 March 2024;
iv.
> 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, whether, directly or indirectly lend or invest in other persons or entities
identified in any manner whatsoever (“Ultimate Beneficiaries”) by or on behalf of
the Company or provide any guarantee, security or the like to or on behalf of the
Ultimate Beneficiaries;
> 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, that the Company shall, whether, directly or indirectly, lend or
invest in other persons or entities identified in any manner whatsoever (“Ultimate
Beneficiaries”) by or on behalf of the Funding Party or provide any guarantee,
security or the like from or on behalf of the Ultimate Beneficiaries; and
> Based on such audit procedures as considered reasonable and appropriate in the
circumstances, nothing has come to our notice that has caused us to believe that
the representations under subclause (a) and (b) above contain any material mis¬
statement.
v. The Company has not declared or paid any dividend during the year ended 31 March
2024.
(i) 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 current year is in accordance
with the provisions of section 197 of the Act.
(j) Based on our examination which included test checks, the company has used an accounting
software for maintaining its books of account for the financial year ended March 31, 2024
which does not have a feature of recording audit trail (edit log) facility, hence the same has
not been operated throughout the year for all relevant transactions recorded in the software.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1,
2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on
preservation of audit trail as per the statutory requirements for record retention is not
applicable for the financial year ended March 31, 2024.
For Kapish Jain & Associates,
Chartered Accountants
Firm's Registration No.: 022743N
Kapish Jain
Partner
Membership No.: 514162
UDIN: 24514162BKBHWD7096
Place: New Delhi
Date: 07 June 2024
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