We have audited the accompanying standalone financial statements of AVG Logistics Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2024, 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, and profit including 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.
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. 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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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 recognition
Revenue from these contracts is recognized in accordance with the requirements of Ind AS 115, Revenue from Contracts with Customers (as described in note 3(b) of the standalone financial statements).
The Company has long term contracts with customers, as at the year end, for all incomplete sales orders, revenue is recognized by evaluating the conditions required as per contractual terms i.e., provision of service to customer and acknowledgement of invoice. Further, revenue is recognised for the completed performance obligation which are part of the incomplete sales orders.
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Our audit procedures in respect of this area include but are
not limited to:
1. Obtained an understanding of the systems, processes and controls implemented by management for recording and computing revenue, and the associated unbilled revenue, unearned and deferred revenue balances;
2. Assessed the appropriateness of Company's accounting policies with respect to Revenue recognition in accordance with IND AS 115 "Revenue from Contracts with Customers";
3. Verified accuracy of the revenue recognition by selecting samples on test check basis and checking the underlying contract terms and conditions;
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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 criteria for identification of the specific performance obligations covered by the sales order and the allocation of the transaction price to each performance obligation requires specific attention due to the judgement involved in identifying the specific performance obligation and determination of whether the agreed provision of services to customer are completed in regard to each of these obligations, as acknowledged by the customers. There is also estimation uncertainty in assessing the incomplete sales orders at the year end and identifying the completed portions of the performance obligations from these sales orders. Considering this we have determined Revenue Recognition to be a Key Audit Matter.
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4. For samples selected on test check basis, evaluated, as to whether performance obligation for revenue recognition is completed as and when the service is rendered to the customer and acknowledged. Further, performed verification of proof of delivery of services completed;
5. Verification of the ageing of the unbilled revenue and testing for the subsequent acknowledgement from the customers; and
6. Verified the completeness and adequacy of disclosure in the standalone financial statements in compliance with Ind AS 115.
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2
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Allowance for trade receivables
Refer to note 17 to the standalone financial statements with respect to the disclosure of trade receivables.
The Company has trade receivables as at March 31, 2024 amounting to ' 17,861.20 lakhs against which the Company has recorded allowance for trade receivables of ' 1,701.68 lakhs.
Management creates allowance for trade receivables based on the expected credit loss model. Additionally, the Company assesses the recoverability of all the debit balances including ageing on case-to-case basis considering the facts and circumstances to decide on adhoc provision required.
We have determined this matter to be key audit matter considering the materiality of the amounts and significant judgements and estimates involved regarding the allowances for trade receivables.
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Our audit procedures in respect of this are included but not
limited to:
1. Obtained an understanding of the process from the management of the Company and tested design implementation and operating effectiveness of controls over for development and consistency of methodology for the computation of allowance for trade receivables, tested the completeness and accuracy of information used in estimation of the probability of default, loss given default and other key estimates;
2. Recomputed the ageing of the trade receivables on sample basis and traced their balances to standalone financial statements;
3. Verified subsequent recovery of trade receivables by tracing them in the books of accounts and bank statement on test check basis;
4. Tested the management computations arising out of expected credit loss model;
5. Analysing significant judgements and estimates involved around the expected credit loss model including examining the class of receivables on which certain % based on historic trends are applied, and further assessed the adequacy of provisions made for any possible non recoveries ascertaining the risk of recoverability or delayed payments, etc.;
6. Assessed the basis of management's judgement regarding specific allowance made against aged balances which are considered to be unrecoverable; and
7. Verified the completeness and adequacy of disclosure in accordance with the requirements of the relevant Ind AS.
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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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3
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impairment of assets
Refer to note 3(l) to the standalone financial statements.
The Company has a warehouse at Agartala, Tripura having carrying value amounting to ' 967.31 lakhs as at March 31, 2024. This warehouse has been capitalised in the financial year 2020-21 and has not been operational since its capitalisation.
Since the warehouse is not operational management would need to assess the impairment by using key estimates including useful life of the building, its fair value, and method of computation of the fair value. We have determined this matter to be key audit matter considering the materiality of the amounts and significant judgements and estimates involved regarding the impairment of the warehouse.
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Our audit procedures in respect of this are included but not
limited to:
1. Obtained an understanding of the systems, processes and control implemented by management for assessment and recording for impairment of assets;
2. Assessment of the Company's accounting policies with respect to impairment in accordance with Ind AS 36 "Impairment of assets";
3. Enquired into the reasons for non-operation of the warehouse since capitalization and assessed them for any impairment indicators;
4. Obtained the fair valuation report of the management's expert for the fair valuation of the warehouse;
5. Involved auditor's expert to assess the appropriateness of the key assumptions and estimates used by the valuers in determination of the fair value of warehouse (such as, useful life of the building, its fair value, and method of computation of the fair value, discount rates, etc.); and
6. Assessed the appropriateness of disclosures in accordance with the requirements of Ind AS 36 "Impairment of assets".
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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 Director's report, Management Discussion and Analysis, Report on Corporate Governance and Financial Highlights but does not include the standalone financial statements and our auditor's report thereon. The annual report is expected to be made available to us after the date of this auditor's report.
Our opinion on the standalone financial statements does not cover the other information and we will 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 identified above when it becomes available 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.
When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance under SA 720 'The Auditor's responsibilities Relating to Other Information'.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Company's Management and 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 statements 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 Management and 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) 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 2h (vi) below on reporting under Rule 11(g).
(i) 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 does not have any pending litigations which would impact its financial position.
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.
iv. a) 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 person(s) or entity(ies), 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 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 have been received by the Company from any person(s) or entity(ies), 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 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 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 (i) and (ii) of Rule 11(e) as provided under (1) and (2) above, contain any material misstatement.
v. The 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.
vi. Based on our examination, the Company has used an accounting software for maintaining its books of account during the year ended March 31, 2024, 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 the software LogicsNext 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 for the software at the database level as stated above, in respect of which the audit trail facility has not operated throughout the year for all relevant transactions recorded in this accounting software as it was not enabled.
Further, during the course of our examination, we did not come across any instance of audit trail feature being tampered with.
3. In our opinion, according to information, explanations given to us, the remuneration paid / provided by the Company to its directors is within the limits laid prescribed under Section 197 read with Schedule V of the Act and the rules thereunder.
For M S K A & Associates
Chartered Accountants
ICAI Firm Registration No. 105047W
Naresh Anand
Partner
Membership No. 503662
UDIN: 24503662BKEJFA9796
Place: Chandigarh
Date: May 29, 2024
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