TO THE MEMBERS OF ZEN TECHNOLOGIES LIMITED
Report on the Audit of the Standalone Financial Statements
OPINION
We have audited the accompanying standalone financial statements of ZEN TECHNOLOGIES LIMITED (the "Company"), which comprises of the Standalone Balance Sheet as at 31 March 2025, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), Standalone Statement of Cash flows and the Standalone Statement of Changes in Equity for the year then ended, and Notes to the Standalone 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, the aforesaid standalone financial statements give the information required by the Companies Act, 2013, as amended (the "Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2025, its profit including total other comprehensive income, its cashflows and changes in equity for the year ended on that date.
BASIS FOR OPINION
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs 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 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 standalone 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 standalone financial statements of the current period. 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. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters.
Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.
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Key Audit Matters
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How our audit addressed the key audit matter
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Revenue from operations (As described in Note 26 of the standalone financial statements)
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During the year, the Company's revenue from operations
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Our audit procedures included but were not limited to, the
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increased by 116.30%. Revenue is recognized when control
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following:
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of the underlying products has been transferred and the performance obligations have been satisfied.
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a)
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We have evaluated the appropriateness of the Company's accounting policies for revenue recognition and assessed
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The terms of sales arrangements create complexity and require
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compliance with relevant accounting standards.
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significant judgments relating to identification of distinct
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b)
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We have reviewed the terms of significant sales
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performance obligations, determination of transaction price
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arrangements to understand the timing of transfer
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of identified performance obligation, the appropriateness
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of control, distinct performance obligations in these
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of revenue recognition on satisfaction of the performance
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contracts and delivery specifications.
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obligations.
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c)
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We have assessed the design and operating effectiveness
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Due to the judgment involved in determining whether transfer of control of goods or services have occurred for the revenue recognized, this matter is considered as Key Audit Matter
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of key controls over revenue recognition processes, including controls over the timing of transfer of control and the satisfaction of performance obligations.
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d)
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We have performed substantive testing on a sample of revenue transactions by inspecting supporting documentation, such as contracts, invoices, and delivery notes, to verify the timing of revenue recognition.
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Key Audit Matters
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How our audit addressed the key audit matter
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e)
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We have tested on sample basis whether revenue transactions near to the reporting data have been recognised in the appropriate period by comparing the transactions selected with relevant underlying documentation as per the terms of delivery specified in the contract.
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f)
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We have reviewed management's judgments and estimates in determining the transfer of control of goods or services for the satisfaction of performance obligations, including any contractual terms that could impact the timing of revenue recognition.
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g)
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We have tested on a sample basis Managements working for recognition and measurement of performance obligations and related variable considerations.
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h)
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We have evaluated the adequacy of disclosures provided under the revenue standard and assessed the completeness and mathematical accuracy to ensure they provide relevant information about the Company's revenue recognition policies and judgments.
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Assessment of warranty provision (As described in Note 19B of the standalone financial statements)
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The Company provides warranties in terms of which it is
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Our audit procedures included but were not limited to, the
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obligated to provide repairs/replacements of the products or
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following:
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components over the contractual warranty period where they have failed to perform as per the technical specifications. These assurance-type warranties are accounted for under Ind AS 37
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a)
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Evaluated any changes made to the provision policy and computation model
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Provisions, Contingent Liabilities and Contingent Assets.
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b)
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Assessed and challenged the assumptions and recomputed the inputs used in warranty provision
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The Company's management makes warranty estimation which
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computation considering business environment in which
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are based on historical information on the nature, frequency
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the Company operates
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and average cost of warranty claims and also management estimates regarding possible future outflow on servicing the customers for any corrective action in respect of product failure.
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c)
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Obtained understanding of the contract terms and possible future outflows to evaluate the adequacy of the provision estimated by the management
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Owing to past trend of reversal of excess provision resulting
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d)
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Evaluated the method used by management in making the
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from high estimation uncertainty that requires significant
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accounting estimates by verifying source data for various
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management and auditor judgment, this matter is considered
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input factors such as historical trend, average historical
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to be a key audit matter for the current year audit
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failure rate, estimation of expected pattern of future claims and estimated replacement cost
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e)
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Verified the computation of provision for warranty costs including testing of completeness, arithmetical accuracy and validity of the data used in the warranty calculations
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f)
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Evaluated the adequacy of disclosures relating to the estimation of Product warranty provisions
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Appropriateness of the Expected Credit Loss on Trade Receivables (As described in Note 10 of the standalone
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financial statements)
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The Company has outstanding trade receivables and Contract
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Our audit procedures included but were not limited to, the
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Asset of Rs. 38,018.45 lakhs and Rs. 1,110.63 lakhs respectively
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following:
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as at March 31,2025, including overdue/aged receivables.
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a)
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Understanding and evaluating the design and testing
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The Company has provided for Expected Credit Loss (ECL) allowance on trade receivables applying the simplified
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the operating effectiveness of controls in respect of ECL provision for trade receivables.
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approach permitted by Ind AS 109 Financial Instruments and
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b)
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Understanding the basis and assessing the
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recognised ECL provision. As a practical expedient, a provision
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appropriateness of the ECL provisioning methodology
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matrix is used to estimate ECL for trade receivables.
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which involves the use of historical trends in respect of receivables categorized by nature and age.
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Trade receivables have been grouped based on shared (homogeneous) risk characteristics to ensure that ECL calculations appropriately reflect the credit risk of each segment
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c)
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Evaluated management's assessment of recoverability of the outstanding receivables, including recoverability of overdue/aged receivables through inquiry with management, and analysis of recent collection trends in respect of receivables, particularly aged receivables.
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Key Audit Matters
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How our audit addressed the key audit matter
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One of the Company's major customers is Ministry of Defence
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d) Reviewing minutes of the Board of Directors' meetings
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(MoD) of India. The Company has past experience available
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and management budgets to understand if there are any
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with it to expected credit loss allowances, if required.
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macro conditions that can have adverse effect on the financial performance of the Company.
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Based on the above experience and using its best estimate, the Company has accounted for an ECL provision of Rs. 178.83 Lakhs on the balance sheet date.
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e) Assessed the adequacy of disclosures in respect of ECL provision in the financial statements.
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Due to the significance of trade receivables and the related management's judgment this is considered to be a key audit matter.
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OTHER INFORMATION
The Company's Management and Board of Directors are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and auditor's reports 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 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 during the course of our 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 and take necessary actions, as applicable under the relevant laws and regulations.
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 and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 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, Board of Directors 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.
Those charged with governance are also responsible for overseeing the Company's financial reporting process of the Company.
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.
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 l43(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 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.
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 standalone financial statements for the financial year ended 31 March 2025 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.
OTHER MATTER
We did not audit the financial statements and other financial information of one branch included in the accompanying standalone financial statements of the Company whose financial statements and other financial information reflect total assets of Rs. 142.25 lakhs as at 31 March 2025 and total revenues of Rs. Nil for the year ended on that date, as considered in the financial statements of these branch have been audited by branch auditor whose reports have been furnished to us by the management, and our opinion in so far as it relates to the amounts and disclosures included in respect of branch, is based solely on the report of such branch auditor.
Our opinion is not modified in respect of these matters.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. 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 and proper returns adequate for the purposes of our audit have been received from the branch not visited by us.
c) The report on the accounts of the branch office of the Company audited under Section 143(8) of the Act by branch auditor have been sent to us and have been properly dealt with by us in preparing this report.
d) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, Statement of Cashflows and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account and with the returns received from the branch not visited by us.
e) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended.
f) On the basis of the written representations received from the directors as on 17 May 2025 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2025 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 controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B" to this report.
h) With respect to the matter to be included in the Auditor's Report under Section 197(16) of the Act:
In our opinion and according to the information and explanations given to us, the managerial remuneration for the year ended 31 March 2025 has been paid/provided by the Company to its directors is in accordance with the provisions of Section 197 read with Schedule V to the Act.
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, 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 standalone financial statements - Refer Note 39 to the standalone financial statements;
ii. The Company did not have any longterm contracts including derivatives contracts for which there were any material foreseeable losses.
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, other than as disclosed in Note-52 to the standalone financial statements, 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(s) or entity(ies), 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 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, other than as disclosed in Note-52 to the standalone financial statements, no funds (which are material either individually or in the aggregate) 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, 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; and
(c) Based on such audit procedures that were 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 (a) and (b) contain any material misstatement.
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 Act to the extent it applies to payment of dividend.
As stated in note 48 to the standalone financial statements, 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 proposed is in accordance with Section 123 of the Act to the extent it applies to declaration of dividend.
vi. Based on our examination, which included test checks, the Company has used accounting software's for maintaining its books of account for the financial year ended March 31,2025, which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. During the course of performing our procedures, we did not notice any instance of the audit trail feature being tampered with. Further, the audit trail, to the extent maintained in the prior year, has been preserved by the Company as per the statutory requirements for record retention.
2. 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 A" a statement on the matters specified in paragraphs 3 and 4 of the Order , to the extent applicable.
For RAMASAMY KOTESWARA RAO AND CO LLP
Chartered Accountants ICAI Firm Registration No.010396S/S200084
Murali Krishna Reddy Telluri
Partner
Place: Hyderabad Membership No. 223022
Date: 17 May 2025 UDIN: 25223022BMJKCO5758
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