Home  »  Company  »  3i Infotech  »  Quotes  »  Auditor Report
Enter the first few characters of Company and click 'Go'

Auditor Report of 3i Infotech Ltd.

Mar 31, 2015

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of 3i Infotech Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("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 principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

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 Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India,

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2015;

(ii) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date, and

(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Emphasis of Matter:

Without qualifying, we draw attention to the following:

a) Going Concern and Impairment analysis:

(i) During the financial year 2011-12, the Company undertook restructuring of its debts through CDR cell and also renegotiated with the Foreign Currency Convertible Bond (FCCB) holders with respect to its obligations. Post the debts restructuring, there have been substantial delays in repayment of Principal and payment of Interest in respect of CDR lenders as well as for the interest on the FCCB , which may be construed as Default as per the Master Restructuring Agreement (MRA) and the terms of FCCB. The Company is negotiating with the aforesaid lenders as also with the lease financiers to restructure the debt and is reasonably certain to renegotiate and meet its financial obligations.

(ii) The Company, as per itsAccounting Policy and in accordance with the requirements ofthe Accounting Standard (AS) 28-'lmpairmentofAssets' and Accounting Standard (AS)-13 Accounting for Investments, specified under Section 133 of the Act, has carried out an impairment analysis of its Cash Generating Units/Long term Investments on a going concern basis, with the assistance of an independent expert valuer and accordingly provision for diminution in value of long term investments (subsidiaries) of Rs.350 crores (Previous yearRs. Nil) has been made. Besides, the Company has provided forRs.305.79croreson account of divestment of stake in step down subsidiaries during theyear Pending negotiations with lenders and restructuring of business, the Company has prepared the financial statements on a going concern basis which is dependent, inter alia, upon the positive outcome of negotiations with lenders, restructuring of business and infusion of funds.

(Refer note no.2.26.1 and 2.26.2 ofthe standalone financial statements)

b) In respect of justification of carrying deferred tax assets recognized in earlier years of Rs.121.33 crores (Previous year Rs.121.33 crores), the management based on the confirmed order book on hand and relying on the restructuring scheme as mentioned in para (a) (i) above, is confident of having sufficient taxable income in the foreseeable future enabling reversal ofthe said deferred tax assets.

(Refer note no.2.11 ofthe standalone financial statements)

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 ofthe Order.

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.

c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 ofthe Companies (Accounts) Rules, 2014.

e) On the basis ofthe written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none ofthe directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

f) 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 2.25.1 of the standalone financial statements).

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses on long-term contracts including derivative contract.

iii. There were no delays in amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF 3i INFOTECH LIMITED ON THE STANDALONE FINANCIAL STATEMENTS

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we state that:

1. a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) During the year, the Company in accordance to a phased programme has physically verified Furniture & Fixtures, Office equipment, Plant and equipment and Computers at five locations which in our opinion, is reasonable considering the size of the Company and nature of its fixed assets. The discrepancies noticed on such verification have been dealt with in the books of accounts.

2. (a) As explained to us, the inventories (hardware held for rendering services) were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

3. As informed, the Company has not granted/taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 189 of the Act.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items of purchase and sale are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventories and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control systems.

5. In our opinion and according to the information and explanations given to us, the Company has not accepted any public deposits within the meaning of Section 73 to 76 or any other relevant provisions of the Act and rules framed thereunder.

6. To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under Section 148 (1) of the Act for the services rendered by the Company. Accordingly, paragraph 3(vi) of the Order is not applicable.

7. a) During the year, the Company has been facing liquidity stress due to which there were substantial delays in payment of various statutory dues such as income tax, sales tax, profession tax and service tax. However, as at the close of the year, there were no arrears outstanding for a period of more than six months from the date they become payable except in respect of Tax Deducted at Source ofRs. 1.52 lacs.

b) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Service Tax, Custom Duty, Wealth tax, Excise Duty and Cess which have not been deposited on account of any dispute except the following :

Nature of Period to which amount Name of Statute Demand Relates

Financial Year 2005-06, MVAT Act, 2002 Sales Tax 2006-07,2009-10

UP VAT Act, 2008 Sales Tax Financial Year 2009-10 and 2010-11

AP VAT Act, 2005 Sales Tax Financial Year 2009-10 and 2010-11

Income Tax Act, 1961 Income Tax Assessment Year 2004-05

Assessment Year 2008-09

Income Tax Act, 1961 Assessment Year 2007-08

Assessment Year 2006-07

Financial year 2004-05 to 2009-10,2011-12,2012-13 Finance Act, 1994 Service Tax Financial year 2010-11

Name of Statute Forum where dispute Rs. in crores is pending

MVAT Act, 2002 32.77 Sales Tax Officer

UP VAT Act, 2008 The Assistant 0.10 Commissioner,Commercial Taxes

AP VAT Act, 2005 Appellate Deputy 0.68 Commissioner

Income Tax Act, 1961 Commissioner of Income 1.00 Tax (Appeals)

5.19 Income Tax Act, 1961 2.83 Income Tax Appellate Tribunal

0.18

Finance Act, 1994 Commissioner of 158.99 Service Tax

Assistant 19.47 Commissioner of Service Tax

b) There were no delays in amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

8. The Company's accumulated losses at the end of the financial year have exceeded 50% of its net-worth. It has incurred cash losses in the current year under review and in the immediately preceding financial year.

9. During the year, there have been defaults in repayment of dues to the banks, financial institutions and debenture holders as per details hereunder:

Particulars Principal Interest

Amount Amount Delay in months Delay in months (Rs. in crores) (Rs. in crores)

Banks 100.59 1-17 123.46 1-12

Finance Lease (Banks) 29.99 1-44 6.72 1-44

Debenture holders- Nil Nil 14.59 4-8 FCCB

10. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by others from banks and financial institutions, are not, prima facie prejudicial to the interest of the Company.

11. In our opinion and according to the information and explanations given to us, the term loans were applied for the purposes for which they were obtained.

12. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing standards in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Lodha & Company

Chartered Accountants

Firm Registration No. 301051E

R.P. Baradiya

Place: Mumbai Partner

Date : 28th May, 2015 Membership No. 44101


Mar 31, 2014

We have audited the accompanying financial statements of 3i Infotech Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparation of these 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 referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control 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.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

(b) In the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date, and

(c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter:

Without qualifying, we draw attention to the following:

(a) Going Concern and Impairment analysis:

During the financial year 2011-12, the Company undertook to restructuring of its debts through CDR cell and also renegotiated with the FCCB holders with respect to its obligations. Post the debts restructuring and, as explained, the Company is confident of successful implementation of the CDR package and meeting its FCCB obligations. The financial statements, therefore, have been prepared on a going concern basis.

The Company, as per its Accounting Policy and in accordance with the requirements of the Accounting Standard (AS) 28 - Impairment of Assets and Accounting Standard (AS) - 13 Accounting for Investments, prescribed under Companies (Accounting Standard) Rules 2006, has carried out an impairment analysis on 31st December, 2013 of its Cash Generating Units / Long term Investments in order to ascertain the extent of impairment. The said analysis as carried out by an independent expert valuer did not reveal any impairment. The same has been relied upon by the auditors being a technical matter (Refer note no. 2.27.1 & 2.27.2 of the Standalone financial statements).

(b) Deferred Tax Assets:

In respect of justification of carrying the deferred tax asset of Rs.121.33 crores (previous year Rs. 103.66 crores), the management, based on the confirmed order book on hand and relying on the Restructuring Scheme approved by the CDR Cell, is confident of having sufficient taxable income in foreseeable future, which would enable reversal of such deferred tax asset (Refer note no. 2.27.3 of the Standalone financial statements).

Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditor''s Report) Order, 2003("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

(2) As required by section 227(3) of the Act, we report that:

(a) we have 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 appears from our examination of those books;

(c) the Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.

(e) On the basis of the written representations received from the directors as on 31st March 2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2014 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF THE 3I INFOTECH LIMITED

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) During the year, the Company in accordance to a phased programme has physically verified Furniture & Fixtures, Office equipment, Plant and equipment and Computers at five locations which in our opinion, is reasonable considering the size of the Company and nature of its fixed assets. The discrepancies noticed on such verification have been dealt with in the books of account.

(c) During the year, the Company has not sold/disposed off substantial portion of its fixed assets.

(ii) The Company is a service company, primarily rendering information technology services. Accordingly, it does not hold any physical inventories. Hence, paragraph 4(ii) of the Order, is not applicable.

(iii) As informed, the Company has not granted/taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Act.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items of purchase and sale are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventories and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

(v) According to the information and explanations provided by the management, we are of the opinion that there are no contracts or arrangements that need to be entered into the register required to be maintained under Section 301 of the Act.

(vi) The Company has not accepted any public deposits within the meaning of Section 58A and 58AA or any other relevant provisions of the Act and rules framed thereunder.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act for the services rendered by the Company. Accordingly, paragraph 4(viii) of the Order is not applicable.

(ix) (a) During the year, the Company has been facing liquidity stress due to which there were delays in payment of various statutory dues such as income tax, sales tax, profession tax and service tax. However, as at the close of the year, there were no arrears outstanding for a period of more than six months from the date they become payable except in respect of Tax Deducted at Source of Rs.6.42 crores and Service tax of Rs. 0.26 crores.

(b) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Service Tax, Custom Duty, Wealth tax, Excise Duty and Cess which have not been deposited on account of any dispute except following :

Name of Nature of Period to which amount Relates Rs in Forum where dispute is Statute Demand crores pending

MVAT Act, Sales Tax Financial Year 2005-06 and 2008-09 2.95 Sales Tax Officer 2002

UP VAT Act, Sales Tax Financial Year 2008-09 and 2010-11 0.12 The Assistant Commissioner, 2008 Commercial Taxes

AP VAT Act, Sales Tax Financial Year 2009-10 to 2010-11 0.02 Appellate Deputy Commissioner 2005

KVAT Act, Sales Tax Financial Year 2005-06 0.01 Dept. Commissioner of 2003 Commercial Taxes Bangalore

Name of Nature of Period to which amount Relates Rs in Forum where dispute is Statute Demand crores pending

Income Tax Income Assessment Year 2004-05 1.00 Commissioner of Income Tax Act, 1961 Tax Assessment Year 2006-07 0.19 (Appeals)

Assessment Year 1999-00 to 01-02 0.18 Income Tax Appellate Tribunal

Assessment Year 2006-07 to 2008-09 8.20

Finance Service Financial year 2004-05 to 2011-12 180.40 Commissioner of Service Tax Act,1994 Tax Financial year 2004-05 & 2005-06 0.16 Joint Commissioner of Service Tax

(x) The Company''s accumulated losses at the end of the financial year have exceeded 50% of its net-worth. It has incurred cash losses in the current year under review and in the immediately preceding financial year.

(xi) During the year, there has been delay of 30-121 days in repayment of dues to the banks in respect of principal of Rs.23.03 crores and interest of Rs.124.31 crores. There are also overdues of Rs.113.21 crores and interest of Rs.77.78 crores (defaults for the period upto 2 years) including in respect of certain banks who did not opt for CDR scheme. The management, as explained, is negotiating with these banks and confident of an amicable restructuring/settlement

(xii) In our opinion and according to the information and explanations given to us, and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by others from banks and financial institutions, are not, prima facie prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans were applied for the purposes for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance sheet and Cash Flow Statement of the Company, in our opinion, the short term funds of '' 128.74 crores have been used for long term investment.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act.

(xix) The Company has not issued any debentures during the year or in the recent past.

(xx) The Company has not raised any money by public issues during the year or in the recent past.

(xxi) During the course of our examination of the books of account and records of the Company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor have been informed of such case by the management.

For R.G.N. PRICE & CO. For LODHA & COMPANY

Chartered Accountants Chartered Accountants

Firm Registration No: 002785S Firm Registration No: 301051E

Mahesh Krishnan R.P. Baradiya

Partner Partner

Membership No. 206520 Membership No. 44101

Place: Mumbai Place: Mumbai

Date: May 2,2014 Date: May 2,2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of 3i Infotech Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparation of these 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 referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control 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.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter :

Without qualifying, we draw attention to note no. 2.27.1 of financial statements regarding the proposed scheme of arrangement under section 391 of the Companies Act, 1956 impairment analysis and justification of carrying deferred tax asset of Rs. 103.66 crores.

Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

(2) As required by section 227(3) of the Act, we report that:

(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(c) the Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

(e) On the basis of the written representations received from the directors as on March 31, 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS” OF OUR REPORT OF EVEN DATE TO THE

MEMBERS OF 3i INFOTECH LIMITED

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) During the year, the Company in accordance to a phased programme has verified Furniture & Fixtures, Office equipment, Plant and equipment and Computers at three locations which in ouropinion, is reasonable considering the size of the Company and nature of its fixed assets. The discrepancies noticed on such verification have been dealt with in the books of account.

(c) During the year, the Company has not sold/disposed off substantial portion of its fixed assets.

(ii) The Company is a service company, primarily rendering information technology services. Accordingly, it does not hold any physical inventories. Hence, paragraph 4(ii) of the Order, is not applicable.

(iii) As informed, the Company has not granted/taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Act.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased and sale of services are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventories and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

(v) According to the information and explanations provided by the management, we are of the opinion that there are no contracts or arrangements that need to be entered into the register required to be maintained under Section 301 of the Act.

(vi) The Company has not accepted any public deposits within the meaning of Section 58A and 58AA or any other relevant provisions of the Act and rules framed thereunder.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act for the services rendered by the Company. Accordingly, paragraph 4(viii) of the Order is not applicable.

(ix) (a) The Company has during the year, as explained in note no. 2.26 has been facing liquidity stress due to which there were delays in payment of various statutory dues such as provident fund, income tax, sales tax, employee state insurance and service tax. However, as at the close of the year, there were no arrears outstanding for a period of more than six months from the date they become payable except in respect of Tax Deducted at Source of Rs. 0.67 crores, Service Tax of Rs. 0.09 crores (since fully paid), Professional Tax of Rs. 0.11 crores (since fully paid) and Central Sales Tax ofRs. 0.04 crores.

(b) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Service Tax, Custom Duty, Wealth tax, Excise Duty and Cess which have not been deposited on account of any dispute except following :

Name of Nature of Period to which amount Relates Statute Demand

Income Tax Income Tax Assessment Year 1999-00 to Act, 1961 2001-02 & 2006-07 to 2008-09

Assessment Year 2003-04 to 2006-07

Finance Service Tax Financial Year 2004-05 to 2010-11 Act, 1994

Financial Year 2004-05 to 2010-11

Name Amount Forum where dispute is (Rs.crores) pending

Income Tax 12.98 Income Tax Appellate Tribunal

2.95 Commissioner of Income Tax (Appeals)

Finance 10.38 Central Excise & Service Tax Appellate Tribunal

0.16 Joint Commissioner of Service Tax

(x) The Company''s accumulated losses at the end of the financial year do not exceed 50% of its net-worth. It has incurred cash losses in the current year under review and in the immediately preceding financial year.

(xi) a) During the year, there have been delays ranging between 1 - 3 months in repayment of dues to the banks - principal amount involved of Rs. 6.30 crores and interest amount involved of Rs. 5.13 crores.

b) In case of certain banks, the Company has defaulted (ranging from 2-18 months) in repaying the principal and interest aggregating to Rs. 12.46 crores.

c) Further, in case of one of the banks who did not opt for Corporate Debt Restructuring (CDR) scheme, the Company has defaulted (ranging from 1 to 18 months) in repaying the principal and interest aggregating to Rs. 112.26 crores.

(xii) In our opinion and according to the information and explanations given to us, and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by others from banks and financial institutions, are not, prima facie prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans were applied for the purposes for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance sheet and Cash Flow Statement of the Company, in our opinion, the funds raised on short term basis have, prima facie, not been used for long term investment.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act.

(xix) The Company has not issued any debentures during the year or in the recent past.

(xx) The Company has not raised any money by public issues during the year or in the recent past.

(xxi) During the course of our examination of the books of account and records of the Company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor have been informed of such case by the management.

For R.G.N. PRICE & CO. For LODHA & COMPANY

Chartered Accountants Chartered Accountants

Firm Registration No : 002785S Firm Registration No : 301051E

Mahesh Krishnan R.P. Baradiya

Partner Partner

Membership No. 206520 Membership No. 44101

Place : Mumbai Place : Mumbai

Date : May 13, 2013 Date : May 13, 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of 3i Infotech Limited ("the Company") as at March 31, 2012 and also the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors' Report) order, 2003, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (hereinafter referred to as "the Act"), we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards prescribed by Companies (Accounting Standards) Rules, 2006, to the extent applicable;

v) On the basis of the written representations received from the directors, as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

vi) Without qualifying attention is drawn to the following :

(a) note no. 2.21(D) regarding the financial statements of the Company having been prepared on a going concern basis, the appropriateness of which is interalia dependent on successful implementation of the scheme approved by the Corporate Debt Restructuring Cell as also that in the opinion of the management, no impairment provision is considered necessary.

(b) note no. 2.21(D) regarding Exceptional write off of Trade Receivables and reversal of Unbilled Revenues of Rs75.40 crores and disclosed as exceptional items.

(c) note no. 2.21(D) regarding carrying amount of Rs27.23 crores for Payment Solution Software Product to be adapted for application in different geographies which in the opinion of the management will be localized in due course of time and commercially exploited thereafter.

vii) Attention is also invited to note no. 2.8.2 in respect of Net Deferred Tax Assets recognized in the earlier years of Rs103.66 crores being carried forward in the Balance Sheet and expected to reverse in foreseeable future, on the basis of order book on hand and the Restructuring Scheme approved by the CDR Cell. However, we are unable to express an opinion as to when and to what extent the aforesaid net deferred tax asset would reverse in the near future

viii) Based on our audit and to the best of our information and according to the explanations given to us, the said financial statements read together with para (vi) and subject to what is stated in para(vii) above, the impact whereof on the loss for the year ended on March 31, 2012 and reserves and assets as at that date is presently not ascertainable and "accompanying Notes" give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

b) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2012 OF 3I INFOTECH LIMITED

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) The Company in accordance to a phased programme was during the year required to physically verify Furniture & Fixtures, Office equipment, Plant and equipment and Computers etc.However only computers/IT Assets have been verified. Accordingly, in our opinion, the frequency and the phased programme of physical verification needs to be improved. The discrepancies noticed on such verification have been dealt with in the books of account.

(c) During the year, the Company has not sold/disposed off substantial portion of its fixed assets.

(ii) The Company is a service company, primarily rendering information technology services. Accordingly, it does not hold any physical inventories. Hence, paragraph 4(ii) of the Order, is not applicable.

(iii) As informed, the Company has not granted/taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Act.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased and sale of services are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventories and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

(v) According to the information and explanations provided by the management, we are of the opinion that there are no contracts or arrangements that need to be entered into the register required to be maintained under Section 301 of the Act.

(vi) The Company has not accepted any public deposits within the meaning of Section 58A and 58AA or any other relevant provisions of the Act and rules framed thereunder.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act for the services rendered by the Company. Accordingly, paragraph 4(viii) of the Order is not applicable.

(ix) (a) The Company during the year, as explained in note no. 2.21 has been facing liquidity stress due to which there were delays in payment of various statutory dues such as Provident fund, income tax and service tax. However, as at the close of the year, there were no arrears outstanding for a period of more than six months from the date they become payable except in respect of Professional Tax of Rs0.13 crores.

(b) According to the information and explanation given to us, there are no dues of Income tax, Sales Tax Wealth tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited on account of any dispute except following :

Name of Statute Nature of Period to which amount Amount Forum where dispute is Demand Relates (Rs in pending crore)

Income Tax Act, Income Tax Assessment Year 1999-00, 3.19 Income Tax Appellate 1961 2000-01,2001-02, 2006- Tribunal 07,2007-08

Income Tax Act, Income Tax Assessment Year 2003-04, 2.76 Commissioner of Income 1961 2004-05,2005-06 Tax (Appeals)

Finance Act,1994 Service Tax 2004-05, 2005-06, 2006- 175.55 Assistany Commissioner of 07,2007-08 , 2008-09,2009- Service Tax 10 & 2010-11

Andhra Pradesh Value Added Tax 2007-08, 2008-09, 2009-10, 0.28 Deputy Commissioner VAT Act, 2005 2010-11, 2011-12 (Commercial Tax), Hyderabad

Karnataka VAT Value Added Tax 2006-07, 2007-08 & 2008- 0.12 Assistant Commissioner Act, 2003 09 (Commercial Tax), Bangalore

Bombay Sales Value Added Tax 2004-05 0.69 Deputy Commissioner of Tax Act, 1959 Sales Tax, (Assessment), Thane

Central Sales Central Sales tax 2007-08, 2008-09, 2009-10, 0.14 Commissioner Tax Officer, Tax, 1956 2010-11 Hyderabad

Central Sales Central Sales tax 2006-07,2007-08, 2008-09 0.17 Assistant Commissioner Tax, 1956 (Commercial Tax), Audit, Bangalore

Central Sales Tax Central Sales tax 2004-05 *0.00 Deputy Commissioner of (Bombay) Rules, Sales Tax, (Assessment), 1957 Thane

*0.00 crores denotes figures less than Rs50,000

(x) The Company's accumulated losses at the end of the financial year do not exceed 50% of its networth. However,it has incurred cash losses in the current year under review but it did not incurr cash losses in the immediately preceding financial year.

(xi) There have been defaults in repayment of dues to the banks during the year, which have been subsequently either rescheduled by way of Corporate debt restructuring package (CDR) except certain overdues of Rs108.84 crores, including interest of Rs7.21 crores (defaults for the period upto six months) to certain banks who did not opt for CDR scheme. The management, as explained, is negotiating with these banks and confident of an amicable restructuring/settlement.

(xii) In our opinion and according to the information and explanations given to us, and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by others from banks and financial institutions, are not, prima facie prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans were applied for the purposes for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance sheet and Cash Flow Statement of the Company, in our opinion, the funds raised on short term basis have, prima facie, not been used for long term investment.

(xviii)The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act.

(xix) The Company has not issued any debentures during the year or in the recent past.

(xx) The Company has not raised any money by public issues during the year or in the recent past.

(xxi) During the course of our examination of the books of account and records of the Company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor have been informed of such case by the management.

For R.G.N. Price & Co. For Lodha & Co.

Chartered Accountants Chartered Accountants

Firm Registration No: 002785S Firm Registration No: 301051E

Mahesh Krishnan R.P. Baradiya

Partner Partner

Membership No. 206520 Membership No. 44101

Place: Mumbai Place: Mumbai

Date: May 16, 2012 Date: May 16, 2012


Mar 31, 2011

1. We have audited the attached Consolidated Balance Sheet of 3i Infotech Limited (the Parent Company), its Subsidiaries and a Joint Venture collectively referred to as the 3i Infotech Group as at March 31, 2011, the Consolidated Proft & Loss Account and also the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These Financial Statements are the responsibility of the Parent Companys management and have been prepared by them on the basis of separate fnancial statements and other fnancial information regarding components. Our responsibility is to express an opinion on these fnancial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fnancial statements are free of material misstatement. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the fnancial statements. An audit also includes assessing the accounting principles used and signifcant estimates made by management, as well as evaluating the overall consolidated fnancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. a) The fnancial statements of 5 subsidiaries, whose fnancial statements refect total assets of ` 785.44 crores as at March 31, 2011 and total revenue of ` 895.02 crores for the year ended on March 31, 2011 have been jointly audited with other auditor.

b) We have not audited the fnancial statements of:

12 subsidiaries included in the consolidated fnancial statements whose fnancial statements refect total assets of ` 1,494.70 crores as at March 31, 2011; as well as the total revenue of ` 675.63 crores for the year ended March 31, 2011. These fnancial statements and other fnancial information have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of such other auditors.

4. The fnancial statements of a joint venture in Nigeria, whose fnancial statements refect total assets of ` 1.88 crores as at March 31, 2011 and total revenue of ` 1.13 crores representing 47.5 percentage share of the 3i Infotech group, for the year ended on March 31, 2011, has not been audited. Our opinion is solely based on the management certifcate provided to us.

5. We report that the consolidated fnancial statements have been prepared by the Parent Companys management in accordance with the requirements of the Accounting Standards (AS) 21 - Consolidated Financial Statements and AS 27 - Reporting of Interests in Joint Ventures prescribed by Companies (Accounting Standards) Rules, 2006 as amended from time to time.

6. Subject to the matter referred to in paragraph 4 above, based on our audit and on consideration of reports of other auditors on separate fnancial statements and the other fnancial information of the components and to the best of our information and according to the explanations given to us, we are of the opinion that the attached Consolidated Financial Statements read together with notes appearing in Schedule XIII of Signifcant Accounting Policies and Notes to Accounts give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of Consolidated Balance Sheet, of the state of affairs of the 3i Infotech Group as at March 31, 2011;

(ii) in the case of Consolidated Proft and Loss Account, of the proft of the 3i Infotech Group for the year ended on that date; and

(iii) in the case of Consolidated Cash Flow Statement, of the cash fows of the 3i Infotech Group for the year ended on that date.

For R.G.N. Price & Co. For Lodha & Co.

Firm Registration No: 002785S Firm Registration No: 301051E

Chartered Accountants Chartered Accountants

Mahesh Krishnan R.P. Baradiya

Partner Partner

Membership No. 206520 Membership No. 44101

Place: Dubai Place: Dubai

Date: April 22, 2011 Date: April 22, 2011



 
Subscribe now to get personal finance updates in your inbox!