Mar 31, 2023
3I INFOTECH LIMITED
Report on the Audit of the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of 3I INFOTECH LIMITED (âthe Company") which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and notes to financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the âthe Standalone Ind AS financial statementsâ).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS financial statements give the information required by the Companies Act, 2013 (âthe Actâ) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (âInd ASâ) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, and its profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.
We conducted our audit of the Standalone Ind AS 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 Ind AS 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 Ind AS financial statements.
Key audit matters are those matters that, in our professional judgment, were of most significance in our 0audit of the Standalone Ind AS financial statements of the current period. These matters were addressed in the context of our audit of the standalone Ind AS 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:
Sr. No. |
Key Audit Matter |
How was the matter addressed in our audit |
1 |
Revenue recognition - Fixed price development |
Principal Audit Procedures: |
contracts |
Our audit procedures on revenue recognized from fixed price |
|
The Company inter alia engages in Fixed-price |
development contracts included: |
|
development contracts, where, revenue is recognized using the percentage of completion computed as per |
⢠Obtaining an understanding of the systems, processes and controls implemented by management for recording and |
|
the input |
calculating revenue and the associated contract assets, |
|
method based on management''s estimate of contract |
unearned and deferred revenue balances. |
|
costs (Refer Note 2(d) and Note 19 to the standalone financial statements) |
⢠On selected samples of contracts, we tested that the revenue recognized is in accordance with the accounting |
|
We identified revenue recognition of fixed price |
standard by- |
|
development contracts as a KAM considering - |
- Evaluating the identification of performance obligation; |
|
⢠There is an inherent risk around the accuracy of revenues given the customized and complex nature of these contracts and significant |
- Testing management''s calculation of the estimation of contract cost and onerous obligation, if any. We: |
|
involvement of IT systems; |
Sr. No. |
Key Audit Matter |
How was the matter addressed in our audit |
⢠Application of revenue recognition accounting standard is complex and involves a number of key judgments and estimates including estimating the future cost-to-completion of these contracts, which is used to determine the percentage of completion of the relevant performance obligation; ⢠These contracts may involve onerous obligations on the Company that require critical estimates to be made by management; and ⢠At year-end a significant amount of work in progress (Contract assets and liabilities) related to these contracts is recognised on the balance sheet. |
> Observed that the estimates of cost to complete were reviewed and approved by appropriate levels of management; > Performed a retrospective review of costs incurred with estimated costs to identify significant variations and verify whether those variations have been considered in estimating the remaining costs to complete the contract; > Assessed the appropriateness of work in progress (contract assets) on balance sheet by evaluating the underlying documentation to identify possible delays in achieving milestones which may require change in estimated costs to complete the remaining performance obligations; and > Performed test of details including analytics to determine reasonableness of contract costs. |
|
2 |
Evaluation of uncertain tax position and contingent liability The Company is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business including transfer pricing and direct and indirect tax matters. These involve significant management judgment to determine the possible outcome of the uncertain tax positions, consequently having an impact on related accounting and disclosures in the standalone Ind AS financial statements. Refer Notes 2(t) and 30 to the standalone financial statements. |
Principal Audit Procedures: Our audit procedures include the following substantive procedures: ⢠Obtained understanding of key uncertain tax positions; and ⢠We along with our internal tax experts- Read and analysed select key correspondences, external legal opinions / consultations by management for key uncertain tax positions; - Discussed with appropriate senior management and evaluated management''s underlying key assumptions in estimating the tax provisions; and - Assessed management''s estimate of the possible outcome of the disputed cases; |
3 |
Assessment of impairment on investment in subsidiaries and Joint Ventures As described in note 5 to the standalone financial statements, the carrying amount of investments in subsidiaries and joint ventures recorded in the separate financial statements is '' 1,320.79 crores (net of impairment) as of March 31, 2023. The Company recognized impairment loss on investments in subsidiaries and joint ventures amounted to '' 1,154.21 crores in previous years. |
Principal Audit Procedures: We understood, evaluated and validated management''s key controls over the impairment assessment process. ⢠We compared the methodology used (value-in-use calculations based on future discounted cash flows) by the Company to market practice. ⢠We obtained management''s future cash flow forecasts, tested the mathematical accuracy of the underlying value-in-use calculations and compared the same to the approved budget and future forecasts. We also compared historical actual results to those budgeted to assess the quality of management''s forecasts. |
Sr. No. |
Key Audit Matter |
How was the matter addressed in our audit |
The Company identifies whether an impairment indication occurs every year and performs impairment test over investments in subsidiaries, and joint venture compares the carrying amount with the greater of the calculated value-in-use and fair value used to determine whether it is impaired. In estimating the value-in-use, management''s judgment is involved in determining the key assumptions such as sales growth rate, gross profit margin, net profit margin, cash flows, discount rate and terminal growth rate that have a significant impact on the estimated value-in-use. Considering significant degree of judgment in estimating value-in-use and likelihood of management bias, we identified assessment of impairment on investments in subsidiaries and joint ventures as a key audit matter. |
⢠We also assessed the reasonableness of key assumptions used in the calculations, comprising sales growth rates, gross profit margin, net profit margin, perpetual growth rate and discount rates. When assessing these key assumptions, we discussed them with management to understand and evaluate management''s basis for determining the assumptions and compared them to external industry outlook reports and economic growth forecasts from a number of sources. ⢠We also obtained from management valuation report from external valuation expert. ⢠We obtained and tested management''s sensitivity analysis around the key assumptions, to ascertain that selected adverse changes to key assumptions, both individually and in aggregate, would not cause the carrying amount of investment to exceed the recoverable amount. ⢠We evaluated management''s assessment on whether any events or change in circumstances indicate there may be a change in the expected useful lives of intangible assets. ⢠We found the Company''s estimates and judgments used in the impairment assessment and useful life to be supported by the available evidence. |
We would like to draw your attention on Note No. 50 of the standalone financial statements, which states that the Company has receivable balance of '' 376.67 Crores and Payable balance of '' 1,078.58 Crores from its various foreign subsidiaries with respect to FEMA compliances and recoverability of the long outstanding receivables. Management is confident that in view of the corrective actions planned, no provisioning is required for long outstanding receivables.
Our Conclusion is not modified in respect of this matter. Other Information
The Company''s Board of Directors is responsible for the other information. The other information comprises information included in the Management Discussion and Analysis, Board''s Report including Annexures to Board''s Report, Business Responsibility Report, Corporate Governance and Shareholders information, but does not include the standalone Ind AS financial statements and our auditor''s report thereon. The above stated reports are expected to be made available to us after the date of this auditor''s report.
Our opinion on the standalone Ind AS 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 Ind AS 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 Ind AS 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 describe actions applicable under the applicable laws and regulations.
Management''s Responsibility for the Standalone Ind AS Financial Statements
The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone Ind AS financial statements that give a true and fair view of the
financial position, financial performance, including total comprehensive income, changes in equity and cash flows of the Company in accordance with the standalone Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS 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 Ind AS financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Ind AS 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 Ind AS 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 Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls 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 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 Ind AS 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 Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone Ind AS financial statements that individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Ind AS financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone Ind AS financial statements.
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 Ind AS financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2020 (the âOrderâ) issued by the Central Government in terms of Section 143(11) of the Act, we give in âAnnexure Aâ a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, based on our audit we report that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid Standalone Ind AS financial statements have been kept by the Company so far as it appears from our examination of those books.
c) The company has a branch office, although no separate books of accounts are prepared by the Branch and hence section 143(8) does not apply to the company.
d) 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 account.
e) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act.
f) In our opinion, there are no financial transactions or matters which have any adverse effect on the functioning of the company.
g) On the basis of the written representations received from the directors as on March 31, 2023, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023, from being appointed as a director in terms of Section 164 (2) of the Act.
h) There is no adverse remark relating to the maintenance of accounts and other matters connected therewith.
i) With respect to adequacy of internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in âAnnexure Bâ. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.
j) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the company to its directors during the year is in accordance with the provisions of section 197 of the Act.
k) In our opinion and to the best of our information and according to the explanations given to us, we report as under 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 as referred to Note 30 to the Standalone Ind AS financial statement.
(ii) The Company has made provision, as required under the applicable law or accounting standard, for material foreseeable losses if any, on long term contracts.
(iii) There has been no delay in transferring 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 (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity (âIntermediariesâ), 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 (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (âFunding Partiesâ), 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 (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
(v) The Company has not declared or paid any dividend during the year, therefore the provisions of section 123 of the Act is not applicable.
(vi) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.
For GMJ & Co Chartered Accountants FRN: 103429W
Partner
Place: Mumbai M. No.: 155537
Date: May 06, 2023 UDIN: 231555 37BGWQ FK1935
Mar 31, 2021
Report on the Audit of the Standalone Ind AS Financial Statements Opinion
We have audited the accompanying standalone Ind AS financial statements of 3I INFOTECH LIMITED (âthe Companyâ) which comprise the Balance Sheet as at March 31, 2021, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and notes to financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the âthe Standalone Ind AS financial statements"). In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS financial statements give the information required by the Companies Act, 2013 (âthe Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (âInd AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2021, and its profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the Standalone Ind AS 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 Ind AS 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 Ind AS 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 Ind AS financial statements of the current period. These matters were addressed in the context of our audit of the standalone Ind AS 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:
Sr.No. |
Key Audit Matter |
How was the matter addressed in our audit |
1 |
Revenue recognition - Fixed price development |
Principal Audit Procedures: |
contracts |
Our audit procedures on revenue recognized |
|
The Company inter alia engages in Fixed-price |
from fixed price development contracts included: |
|
development contracts, where, revenue is |
⢠Obtaining an understanding of the systems, |
|
recognized using the percentage of completion |
processes and controls implemented by |
|
computed as per the input |
management for recording and calculating |
|
method based on management''s estimate of |
revenue and the associated contract assets, |
|
contract costs (Refer Note 2(d) and Note 20 to the |
unearned and deferred revenue balances. |
|
standalone financial statements) |
⢠On selected samples of contracts, we tested |
|
We identified revenue recognition of fixed price |
that the revenue recognized is in accordance |
|
development contracts as a KAM considering - |
with the accounting standard by- |
|
⢠There is an inherent risk around |
- Evaluating the identification of |
|
the accuracy of revenues given the |
performance obligation; |
|
customized and complex nature of these |
- Testing management''s calculation of the |
|
contracts and significant involvement of |
estimation of contract cost and onerous |
|
IT systems; |
obligation, if any. We: |
|
⢠Application of revenue recognition |
HI Observed that the estimates of cost to |
|
accounting standard is complex and |
complete were reviewed and approved |
|
involves a number of key judgments |
by appropriate levels of management; |
|
and estimates including estimating |
HI Performed a retrospective review of |
|
the future cost-to-completion of these |
costs incurred with estimated costs to |
|
contracts, which is used to determine the |
identify significant variations and verify |
|
percentage of completion of the relevant |
whether those variations have been |
|
performance obligation; |
considered in estimating the remaining |
|
⢠These contracts may involve onerous |
costs to complete the contract; |
|
obligations on the Company that |
HI Assessed the appropriateness of work |
|
require critical estimates to be made by |
in progress (contract assets) on balance |
|
management; and |
sheet by evaluating the underlying |
|
⢠At year-end a significant amount of |
documentation to identify possible |
|
work in progress (Contract assets and |
delays in achieving milestones which |
|
liabilities) related to these contracts is |
may require change in estimated costs |
|
recognised on the balance sheet. |
to complete the remaining performance obligations; and HI Performed test of details including analytics to determine reasonableness of contract costs. |
2 |
Evaluation of uncertain tax Dosition and |
PrinciDal Audit Procedures: |
contingent liability The Company is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business including transfer pricing and direct and indirect tax matters. These involve significant management judgment to determine the possible outcome of the uncertain tax positions, consequently having an impact on related accounting and disclosures in the standalone Ind AS financial statements. Refer Notes 2(t) and 31 to the standalone financial statements. |
Our audit procedures include the following substantive procedures: ⢠Obtained understanding of key uncertain tax positions; and ⢠We along with our internal tax expertsâ Read and analysed select key correspondences, external legal opinions / consultations by management for key uncertain tax positions; â Discussed with appropriate senior management and evaluated management''s underlying key assumptions in estimating the tax provisions; and â Assessed management''s estimate of the possible outcome of the disputed cases; |
3 |
Assessment of impairment on investment in |
Principal Audit Procedures: |
subsidiaries and Joint Ventures As described in |
We understood, evaluated and validated |
|
note 5 to the standalone financial statements, the |
management''s key controls over the impairment |
|
carrying amount of investments in subsidiaries |
assessment process. |
|
and joint ventures recorded in the separate |
⢠We compared the methodology used |
|
financial statements is Rs.1,219.86 crores (net of |
(value-in-use calculations based on future |
|
impairment) as of March 31, 2021. The Company |
discounted cash flows) by the Company to |
|
recognized impairment loss on investments in |
market practice. |
|
subsidiaries and joint ventures amounted to |
||
Rs.1,146.85 Crores in previous years. |
⢠We obtained management''s future cash flow forecasts, tested the mathematical |
|
The Company identifies whether an impairment |
accuracy of the underlying value-in-use |
|
indication occurs every year and performs |
calculations and compared the same to |
|
impairment test over investments in subsidiaries, |
the approved budget and future forecasts. |
|
and joint venture compares the carrying amount |
We also compared historical actual results |
|
with the greater of the calculated value-in-use and |
to those budgeted to assess the quality of |
|
fair value used to determine whether it is impaired. |
management''s forecasts. |
|
In estimating the value-in-use, management''s |
⢠We also assessed the reasonableness of |
|
judgment is involved in determining the key |
key assumptions used in the calculations, |
|
assumptions such as sales growth rate, gross |
comprising sales growth rates, gross profit |
|
profit margin, net profit margin, cash flows, |
margin, net profit margin, perpetual growth |
|
discount rate and terminal growth rate that have |
rate and discount rates. When assessing these |
|
a significant impact on the estimated value-in- |
key assumptions, we discussed them with |
|
use. Considering significant degree of judgment |
management to understand and evaluate |
|
in estimating value-in-use and likelihood of |
management''s basis for determining the |
|
management bias, we identified assessment of |
assumptions, and compared them to external |
|
impairment on investments in subsidiaries and |
industry outlook reports and economic |
|
joint ventures as a key audit matter. |
growth forecasts from a number of sources. ⢠We also obtained from management valuation report from external valuation expert. ⢠We obtained and tested management''s sensitivity analysis around the key assumptions, to ascertain that selected adverse changes to key assumptions, both individually and in aggregate, would not cause the carrying amount of investment to exceed the recoverable amount. ⢠We evaluated management''s assessment on whether any events or change in circumstances indicate there may be a change in the expected useful lives of intangible assets. ⢠We found the Company''s estimates and judgments used in the impairment assessment and useful life to be supported by the available evidence. |
Emphasis of Matter
We draw attention to Note No 43 of the Standalone Ind AS financial statements, which relates to differences in balances with the subsidiary 3i Infotech Saudi Arabia LLC amounting to INR 74.05 crores, relating to various
previous financial years, for which the company is in the process of passing the entries and eliminating the differences.
Our Opinion is not modified in respect of this matter Other Information
The Company''s Board of Directors is responsible for the other information. The other information comprises information included in the Management Discussion and Analysis, Board''s Report including Annexures to Board''s Report, Business Responsibility Report, Corporate Governance and Shareholders information, but does not include the standalone Ind AS financial statements and our auditor''s report thereon. The above stated reports are expected to be made available to us after the date of this auditor''s report.
Our opinion on the standalone Ind AS 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 Ind AS 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 Ind AS financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Management''s Responsibility for the Standalone Ind AS Financial Statements
The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance, including total comprehensive income, changes in equity and cash flows of the Company in accordance with the standalone Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS 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 Ind AS financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Ind AS 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 Ind AS 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 Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls 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 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 Ind AS 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 Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone Ind AS financial statements that individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Ind AS financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone Ind AS financial statements.
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 Ind AS financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2016 (âthe Order"), issued by the Central
Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the âAnnexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by Section 143(3) of the Act, based on our audit we report 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 relating to preparation of the aforesaid Standalone Ind AS financial statements have been kept by the Company so far as it appears from our examination of those books.
c) The company has a branch office, although no separate books of accounts are prepared by the Branch and hence section 143(8) does not apply to the company.
d) 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 account.
e) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act.In our opinion, there are no financial transactions or matters which have any adverse effect on the functioning of the company
f) On the basis of the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 from being appointed as a director in terms of Section 164 (2) of the Act.
i) There is no adverse remark relating to the maintenance of accounts and other matters connected therewith.
j) With respect to adequacy of internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in âAnnexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.
k) In our opinion and to the best of our information and according to the explanations given to us, we report as under 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 as referred to Note 31 to the Standalone Ind AS financial statement.
(ii) The Company has made provision, as required under the applicable law or accounting standard, for material foreseeable losses if any, on long term contracts.
(iv) There has been no delay in transferring amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
l) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the company to its directors during the year is in accordance with the provisions of section 197 of the Act.
For GMJ & Co Chartered Accountants FRN: 103429W CA Sanjeev Maheshwari Partner M. No.: 038755
UDIN: 21038755AAAACH3020 Place : Mumbai Date : May 17, 2021
Mar 31, 2018
Report on Standalone Financial Statements
We have audited the accompanying standalone financial statements of â3i Infotech Limitedâ (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss (including other comprehensive income), Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.
Managementâs Responsibility for the Standalone Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation 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 the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with the Companies (Indian Accounting Standard) Rules 2015, as amended, and other accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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.
Auditorâs 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 there under and the Order issued under Section 143(11) of the Act.
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 standalone financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.
An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the standalone 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, of the financial position of the Company as at March 31, 2018,and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matter
We draw attention to Note 31 to the Financial statement in respect of remuneration paid to the Managing Director and Global CEO of the Company which was in excess of the limits prescribed under Section 197 of the Act and was subject to the approval of the Central Government for the financial year 2016-17.
Our Opinion is not qualified for above matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the âAnnexure Aâ 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 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 (including other comprehensive income) ,the Statement Cash Flow and Statement of Changes in Equity 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 Indian Accounting Standards prescribed under Section 133 of the Act;
(e) On the basis of the written representations received from the directors as on 31st March, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018, from being appointed as a director in terms of Section 164(2) of the Act.
(f) With respect to adequacy of internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in âAnnexure Bâ; and
(g) In our opinion and to the best of our information and according to the explanations given to us, we report as under with respect to other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules,2014:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements. Refer Note No. 30 to the standalone financial statements
ii. The Company has made provision, as required under the applicable law or accounting standard, for material foreseeable losses if any, on long term contracts.
iii. There has been no delay in transferring amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
âANNEXURE Aâ
ANNEXURE REFERREDTOIN PARAGRAPH âREPORT ONOTHERLEGALANDREGUALTORYREQUIREMENTSâ OF OUR REPORT TO THE MEMBERS OF âTHE COMPANYâFOR THE YEAR ENDED MARCH 31, 2018
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:
(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 Machinery and Computers at six locations which in our opinion, is reasonable considering the size of the Company and nature of its fixed assets. According to information and explanations given to us, no material discrepancies were noticed on such verification.
c) Based on the information and explanations given to us, the title deeds of immovable properties are held in the name of the Company, except in respect of immovable properties of Land & Building that have been taken on lease and disclosed as fixed assets in Note 3 to the standalone and Ind AS financial statements, title deeds of the same are in erstwhile name of the Company.
(ii) As The Company is a service company, primarily rendering software services. Accordingly it does not hold any physical inventories during the year. Accordingly, paragraph 3(ii) of the Order is not applicable to the Company.
(iii) The Company had granted loans in the previous years (taking over of lenders liability of wholly owned subsidiary in terms of DRS Scheme) to 3 body corporate covered in the register maintained under section 189 of the Act.
a) During the year, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act. Accordingly paragraph 3(iii)(a) of the Order is not applicable.
b) In respect of existing loans outstanding, the schedule of repayment of principal and interest has been stipulated, and the parties are repaying the principal amounts, as stipulated, and also regular in payment of interest.
c) In respect of existing loans outstanding, there is no amount which was overdue during the year.
(iv) In our opinion and according to the information and explanations given to us, the Company has not advanced any loan, provided guarantee and security covered in Section 185 of the Act. The Company has complied with the provisions of Section 186 of the Act to the extent applicable, with respect to the loans and investments made, guarantees given and security provided.
(v) The Company has not accepted deposits from public within the meaning of directives issued by RBI (Reserve Bank of India) and Sections 73 to 76 or any other relevant provisions of the Act and rules framed there under.
(vi) The Central Government has not prescribed the maintenance of cost records under Section 148 (1) of the Act, for any of the services rendered by the Company. Accordingly, paragraph 3(vi) of the Order is not applicable.
(vii) a) According to the information and explanations given to us and on the basis of examination of records, the Company is generally regular in depositing amounts deducted/ accrued in respect of undisputed statutory dues including provident fund, income tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues. As explained to us the Company did not have any dues on account of employeesâ state insurance and duties of excise.
According to the information and explanations given to us and on the basis of examination of records of the Company, no undisputed amounts payable in respect of provident fund, income tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues were in arrears as at March 31, 2018 for a period more than six months from the date they became payable.
b) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise and Value added Tax which have not been deposited on account of any dispute except the following :
Rs. in Crores
Name of Statute |
Nature of Demand |
Period to which amount Relates |
Amount of Dispute |
Amount Paid/ Adjusted |
Amount Unpaid |
Forum where dispute is pending |
MVAT Act, 2002 |
Sales Tax |
Financial Year 200506, 2006-07 |
2.06 |
- |
2.06 |
Sales Tax Officer |
Karnataka Sales Tax Act, 1957 |
Sales Tax |
Financial Year 200910 |
3.89 |
2.04 |
1.85 |
Appellate Deputy Commissioner |
AP VAT Act,2005 |
Sales Tax |
Financial Year 200910 and 2010-11 |
0.68 |
- |
0.68 |
Appellate deputy Commissioner |
Income Tax Act 1961 |
Income Tax |
Assessment Year 2004-05 |
1.00 |
- |
1.00 |
Commissioner of Income Tax(Appeals) |
Assessment year 2007-08 |
25.25 |
25.25 |
- |
Income Tax Appellate Tribunal |
||
Assessment year 2007-08 |
5.64 |
5.64 |
- |
Income Tax Appellate Tribunal |
||
Assessment year 2007-08 |
2.83 |
- |
2.83 |
Income Tax Appellate Tribunal |
||
Assessment year 2006-07 |
0.18 |
- |
0.18 |
|||
Finance Act, 1994 |
Service Tax |
Financial year 200405 to 2006-07, 2006-07, 2012-13 |
2.81 |
0.21 |
2.6 |
Commissioner (Appeal) |
Financial Year 2004-05 to 200809,2009-10, 201011, 2011-12 |
168.81 |
168.81 |
CESTAT |
|||
Financial year 201415 and 2015-16 |
1.04 |
1.04 |
Additional Commissioner of GST & C. Ex |
|||
Financial Year 200405 & 2005-06 |
0.15 |
0.03 |
0.12 |
Commissioner of Service Tax |
(viii) As per clause 3.4 of the Supplement Restructuring Agreement in terms of DRS to the Master Restructuring Agreement dated March 30, 2012 with the lenders and as per the revised terms of the Foreign Currency Convertible Bonds (FCCB), there is no default in repayment of dues to the banks, financial institutions and debenture holders.
(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year or in the recent past. Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.
(x) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud by or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of such case by the management.
(xi) According to the information and explanations given to us and based on our examination of the records, during the year the Company has paid managerial remuneration as per the limits prescribed under Section 197 of the Act. However in respect of remuneration paid to the Managing Director and Global CEO of the Company which was in excess of the limits prescribed under Section 197 of the Act and was subject to the approval of the Central Government for the financial year 2016-17.
(xii) According to the information and explanations given to us, the Company is not a Nidhi Company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company.
(xiii)According to information and explanations given us and based on our examination of the records of the Company, all transactions with the related parties are in compliance with Sections 177 and 188 of the Act and details of such transactions have been disclosed in the standalone financial statements as required by Ind AS 24, Related Party Disclosures specified under Section 133 of the Act read with the relevant rules issued thereunder. Refer Note 31 to the standalone financial statements.
(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Therefore, the provisions of clause 3(xiv) of the Order are not applicable to the Company.
(xv) According to information and explanations given to us and based on our examination of records of the Company, the company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly paragraph 3 (xv) of the Order is not applicable;
(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly paragraph 3 (xvi) of the Order is not applicable.
ANNEXURE Bâ
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act
We have audited the internal financial controls over financial reporting of 3i Infotech Limited (âthe Companyâ) as of March 31, 2018 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditorsâ Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing deemed to be prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companyâs assets that could have a material effect on the standalone financial satements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For GMJ & Company
Chartered Accountants
FRN : 103429W
CA Sanjeev Maheshwari
Partner
Membership No. 38755
Place: Mumbai
Date: April 23, 2018
Mar 31, 2017
To
The Members of 3i Infotech Limited
Report on Indian Accounting Standards ("Ind ASâ) Financial Statements
We have audited the accompanying standalone Ind AS financial statements of 3i Infotech Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss (including other comprehensive income), Statement of Cash Flows and the Statement of Changes in Equity for the year then ended and a summary of significant accounting policies and other explanatory information (hereinafter referred to as ''Standalone Ind AS Financial Statements'').
Management''s Responsibility for the Standalone Ind AS 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 Ind AS Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and statement of 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 relevant rules issued there under.
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 Ind AS 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 Standalone Ind AS 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 there under.
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 Standalone Ind AS Financial Statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Standalone Ind AS Financial Statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the Standalone Ind AS 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 Standalone Ind AS Financial Statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.
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 Standalone Ind AS 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 Ind AS Financial Statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS 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 including the Ind AS, of the financial position of the Company as at March 31, 2017,and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matter
Remuneration paid/provided of Rs. 1.23 crores for the financial year 2016-17 in respect of the Managing Director and Global CEO of the Company which is in excess of the limits prescribed under section 198 of the Act and subject to the approval of the Central Government. As explained by Management, the Company is in the process of filling an application with Central Government for obtaining approval thereof (Refer Note 34 (vi) to the Standalone Ind AS Financial Statements).
Our opinion is not qualified for above matter
Other Matter
The comparative financial information of the Company for the year ended March 31, 2016 and the transition date opening balance sheet as at April 01, 2015 included in these standalone Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by the one of the joint auditors whose report for the year ended March 31, 2017 dated August 11, 2016 expressed unmodified opinion on those financial statements, as adjusted for the differences in the accounting principles adopted by the company on transition to the Ind AS, which have been audited by us.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor''s Report) Order, 2016 ("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 âAnnexure Aâ statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
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 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 (including other comprehensive income), the Cash Flow Statement and statement of changes in Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act, read with the relevant rules issued there under;
(e) On the basis of the written representations received from the directors as on March 31, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017, from being appointed as a director in terms of Section 164 (2) of the Act.
(f) With respect to adequacy of internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in âAnnexure Bâ; and
(g) In our opinion and to the best of our information and according to the explanations given to us, we report as under with respect to other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules,2014:
i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Ind AS Financial Statements. Refer Note No. 33B to the Standalone Ind AS Financial Statements
ii. The Company has made provision, as required under the applicable law or accounting standard, for material foreseeable losses if any, on long term contracts
iii. There has been no delay in transferring amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in its Standalone IndAS Financial Statements as to holdings as well as dealings in Specified Bank Notes during the period from November 08, 2016 to December 30, 2016 and these are in accordance with the books of account maintained by the Company. Refer Note 43 to the Standalone Ind AS Financial Statements.
ANNEXURE REFERRED TO IN PARAGRAPH "REPORT ON OTHER LEGAL AND REGUALTORY REQUIREMENTS" OF OUR REPORT TO THE MEMBERS OF "THE COMPANY"FOR THE YEAR ENDED MARCH 31, 2017
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:
(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 Machinery and Computers at six locations which in our opinion, is reasonable considering the size of the Company and nature of its fixed assets. According to information and explanations given to us, no material discrepancies were noticed on such verification.
c) Based on the information and explanations given to us, the title deeds of immovable properties are held in the name of the Company, except in respect of immovable properties of Land & Building that have been taken on lease and disclosed as fixed assets in Note 4 to the standalone Ind AS financial statements, title deeds of the same are in erstwhile name of the Company.
(ii) As the Company is a service company, primarily rendering software services. Accordingly it does not hold any physical inventories during the year. Thus paragraph 3(ii) of the Order is not applicable to the Company
(iii) The Company has granted loans in the previous years (taking over of lenders liability of wholly owned subsidiaries in terms of DRS scheme) to 3 body corporate covered in the register maintained under section 189 of the companies Act 2013.
a) During the year, the company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly paragraph 3(iii)(a) of the Order is not applicable.
b) In respect of the existing loans outstanding, the schedule of repayment of principal and interest has been stipulated, and the parties are repaying the principal amounts, as stipulated, and also regular in payment of interest.
c) In respect of existing loans outstanding, there is no amount which was overdue during the year.
(iv) In our opinion and according to the information and explanations given to us, the Company has not advanced any loan, provided guarantee and security covered in Section 185 of the Act. The Company has complied with the provisions of section 186 of the Act to the extent applicable, with respect to the loans and investments made, guarantees given and security provided.
(v) The Company has not accepted deposits from public within the meaning of directives issued by RBI (Reserve Bank of India) and Sections 73 to 76 or any other relevant provisions of the Act and rules framed there under.
(vi) The Central Government has not prescribed the maintenance of cost records under Section 148 (1) of the Companies Act 2013, for any of the services rendered by the Company. Accordingly, paragraph 3(vi) of the Order is not applicable.
(vii) a) According to the information and explanations given to us and on the basis of examination of records, the Company is generally regular in depositing amounts deducted/ accrued in respect of undisputed statutory dues including provident fund, income tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues. As explained to us the Company did not have any dues on account of employees'' state insurance and duties of excise.
According to the information and explanations given to us and on the basis of examination of records of the Company, no undisputed amounts payable in respect of provident fund, income tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues were in arrears as at March 31, 2017 for a period more than six months from the date they became payable.
b) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise and Value added Tax which have not been deposited on account of any dispute except the following :
Name of Statute |
Nature of Demand |
Period to which amount Relates |
Rs. in crores |
Forum where dispute is pending |
MVAT Act, 2002 |
Sales Tax |
Financial Year 2005-06, 2006-07 |
2.06 |
Sales Tax Officer |
Karnataka Sales Tax Act, 1957 |
Sales Tax |
Financial Year 2009-10 |
2.72 |
Appellate Deputy Commissioner |
AP VAT Act, 2005 |
Sales Tax |
Financial Year 2009-10 and 2010-11 |
0.68 |
Appellate Deputy Commissioner |
Income Tax Act, 1961 |
Income Tax |
Assessment Year 2004-05 |
1.00 |
Commissioner of Income Tax (Appeals) |
Assessment Year 2007-08 |
2.83 |
Income Tax Appellate Tribunal |
||
Assessment Year 2006-07 |
0.18 |
|||
Finance Act, 1994 |
Service Tax |
Financial year 2004-05 to 2009-10, 2011-12, 2012-13 |
151.83 |
Commissioner of Service Tax |
Financial year 2010-11 |
19.47 |
Assistant Commissioner of Service Tax |
(viii) As per clause 3.4 of the Supplement Restructuring Agreement in terms of DRS to the Master Restructuring Agreement dated 30th March, 2012 with the lenders and as per the revised terms of the Foreign Currency Convertible Bonds (FCCB), there is no default in repayment of dues to the banks, financial institutions and debenture holders.
(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year or in the recent past. Based on the information and explanations given to us by the Management, term loans were applied for the purpose for which the loans were obtained.
(x) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud by or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of such case by the Management.
(xi) According to the information and explanations given to us and based on our examination of the records, during the year the Company has paid managerial remuneration amounting to Rs. 1.23 crores to Managing Director and Global CEO which is subject to approval of the Central Government as per the provisions of Section 197 read with Schedule V of the Act. As explained to us requisite approval of the Central Government is being sought by the Company.
(xii) According to the information and explanations given to us, the Company is not a Nidhi Company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company.
(xiii) According to information and explanations given us and based on our examination of the records of the Company, all transactions with the related parties are in compliance with sections 177 and 188 of the Act and details of such transactions have been disclosed in the standalone Ind AS Financial Statements as required by Ind AS 24, Related Party Disclosures specified under section 133 of the Act read with the relevant rules issued there under. Refer Note 34 to the standalone Ind AS Financial Statements.
(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Therefore, the provisions of clause 3(xiv) of the Order are not applicable to the Company.
(xv) According to information and explanations given to us and based on our examination of records of the Company, the company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly paragraph 3 (xv) of the Order is not applicable;
(xvi) The company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly paragraph 3 (xvi) of the Order is not applicable.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act
We have audited the internal financial controls over financial reporting of 3i Infotech Limited (âthe Companyâ) as of March 31, 2017 in conjunction with our audit of the Standalone Ind AS Financial Statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditors'' Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the Standalone IndAS Financial Statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Standalone Ind AS Financial Statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)provide reasonable assurance that transactions are recorded as necessary to permit preparation of Standalone Ind As Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the Standalone Ind AS Financial Statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For GMJ & Company For LODHA & Company
Chartered Accountants Chartered Accountants
Firm Registration No:103429W Firm Registration No: 301051E
S. Maheshwari R.P. Baradiya
Partner Partner
Membership No. 38755 Membership No. 44101
Place: Navi Mumbai Place: Navi Mumbai
Date: April 30, 2017 Date: April 30, 2017
Mar 31, 2016
To
The Members of 3i Infotech Limited
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of 3i Infotech Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2016, 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.
Managementâs 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 (âthe Actâ) 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.
Auditorâs 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 there under.
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. 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 of the state of affairs of the Company as at March 31, 2016 and its loss and cash flows for the year ended on that date.
Emphasis of Matter:
Without qualifying, we draw attention to the following:
a) Going Concern :
The financial statements of the Company has been prepared on a going concern basis, in view of expected continued support of the lenders and also meeting its financial obligations based on the projected operational performance in terms of the Debt Restructuring Scheme (DRS) approved in April 2016. Also, refer note no. 2.30 of the standalone financial statements.
b) Impairment Analysis and Additional amortization/depreciation:
(i) 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, 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, during the year has made provision for impairment loss of Rs. 150 crores (Previous year Rs. 350 crores). Besides, the Company has provided for Rs. 44.25 crores (Previous year Rs. 305.79 crores) on account of divestment of stake/diminution in value of investments during the year. Also, refer note no. 2.29 of the standalone financial statements.
(ii) The Company has on evaluation amortized/provided additional depreciation aggregating to Rs. 839.64 crores on intangibles / finance lease assets. Also, refer note no. 2.9 of the standalone financial statements.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor''s Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the âAnnexure Aâ a statement on the matters specified in paragraphs 3 of the Order.
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 of the Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from the directors as on March 31, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Bâ.
(g) 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 2.26.1 to the standalone financial statements)
ii. The Company has made provision, as required under the applicable accounting standards, for material foreseeable losses on long term contracts.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
âANNEXURE Aâ
ANNEXURE REFERRED TO IN PARAGRAPH âREPORT ON OTHER LEGAL AND REGUALTORY REQUIREMENTSâ OF OUR REPORT TO THE MEMBERS OF âTHE COMPANYâFOR THE YEAR ENDED MARCH 31, 2016
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 Machinery and Computers at six locations which in our opinion, is reasonable considering the size of the Company and nature of its fixed assets. Pursuant to the program, physical verification of fixed assets has been carried out during the year and no material discrepancies were noticed on such verification.
c) Based on the information and explanations given to us, the title deeds of immovable properties are held in the name of the Company.
2. As per the information and explanations given to us, the inventories (hardware held for rendering services) were physically verified during the year by the management at reasonable intervals and no material discrepancies were noticed on such physical verification.
3. The Company has granted (taking over of lenders liability of wholly owned subsidiaries in terms of DRS scheme) unsecured loan to 3 companies covered in the register maintained under Section 189 of the Act. There are no firms / LLPs/ other parties covered in the register maintained under Section 189 of the Act.
(a) In respect of the aforesaid loans, the terms and conditions under which such loans were granted are not prejudicial to the Company''s interest.
(b) In respect of the aforesaid loans, the schedule of repayment of principal and interest has been stipulated, and the parties are repaying the principal amounts, as stipulated, and also regular in payment of interest as applicable.
(c) In respect of the aforesaid loans, there is no amount which was due during the year.
4. In our opinion and according to the information and explanations given to us, the Company has not advanced any loan, provided guarantee and security covered in Section 185 of the Act. The Company has complied with the provisions of Section 186 of the Act to the extent applicable, with respect to the loans and investments made, guarantees given and security provided.
5. No deposits have been accepted by the Company within the meaning of directives issued by Reserve Bank of India (RBI) and Sections 73 to 76 or any other relevant provisions of the Act and rules framed there under.
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 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.
b) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise and Value added Tax which have not been deposited on account of any dispute except the following :
Name of Statute |
Nature of Demand |
Period to which amount Relates |
Rs. in crores |
Forum where dispute is pending |
MVAT Act, 2002 |
Sales Tax |
Financial Year 2005-06, 2006-07, 2010-11 |
30.87 |
Sales Tax Officer |
UP VAT Act, 2008 |
Sales Tax |
Financial Year 2009-10 and 2010-11 |
0.03 |
The Assistant Commissioner, Commercial Taxes |
AP VAT Act, 2005 |
Sales Tax |
Financial Year 2009-10 and 2010-11 |
0.68 |
Appellate Deputy Commissioner |
KARNATAKA VAT Act, 2003 |
Sales Tax |
Financial Year 2009-10 |
2.72 |
Appellate Deputy Commissioner |
Income Tax Act, 1961 |
Income Tax |
Assessment Year 2004-05 |
1.00 |
Commissioner of Income Tax (Appeals) |
Assessment Year 2006-07 |
0.18 |
Income Tax Appellate Tribunal |
||
Assessment Year 2007-08 |
2.83 |
|||
Finance Act,1994 |
Service Tax |
Financial year 2004-05 to 2009-10, 2011-12, 2012-13 |
158.99 |
Commissioner of Service Tax |
Financial year 2010-11 |
19.47 |
Assistant Commissioner of Service Tax |
8. As per clause 3.4 of the Supplement Restructuring Agreement in terms of DRS to the Master Restructuring Agreement dated March 30, 2012 with the lenders and as per the revised terms of the Foreign Currency Convertible Bonds (FCCB), there is no default in repayment of dues to the banks, financial institutions and debenture holders.
9. The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year or in the recent past. Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.
10. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud by or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of such case by the management.
11. According to the information and explanations given to us and based on our examination of the records, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V of the Act.
12. In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company.
13. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, all transactions with the related party are in compliance with Section 177 and 188 of the Act and the details have been disclosed as required by the applicable Accounting Standard (Refer note no 2.35 to the Standalone Financial Statements).
14. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Therefore, the provisions of clause 3(xiv) of the Order are not applicable to the Company.
15. Based on the information and explanations given to us, the Company has not entered into any non-cash transactions prescribed under Section 192 of the Act with directors or persons connected with them during the year.
16. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.
ANNEXURE Bâ
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act
We have audited the internal financial controls over financial reporting of 3i Infotech Limited (âthe Companyâ) as of March 31, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditorsâ Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing deemed to be prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For Lodha & Company Chartered Accountants Firm Registration No. 301051E
R.P. Baradiya
Place: Mumbai Partner
Date : August 11, 2016 Membership No. 44101
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 REQUIREMENTSÂ 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
Mar 31, 2010
1. We have audited the attached Consolidated Balance Sheet of 3i
Infotech Limited (the ÃParent CompanyÃ) and its subsidiaries
collectively referred to as Ãthe 3i Infotech Groupà as at March 31,
2010, 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
CompanyÃs 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 2 subsidiaries, whose fnancial
statements refect total assets of Rs. 504.68 crores
as at March 31, 2010 and total revenue of Rs. 592.81 crores for the
year ended on March 31, 2010 have been jointly audited with other
auditors.
b) We have not audited the fnancial statements of 29 subsidiaries
included in the consolidated fnancial statements, whose fnancial
statements refect the total assets of Rs. 2,590.99 crores as at March
31, 2010 and total revenue for the year ended March 31, 2010 of Rs.
1,033.77 crores. 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 the
other auditors.
4. We report that the consolidated fnancial statements have been
prepared by the Parent CompanyÃs management in accordance with the
requirements of the Accounting Standards (AS) 21 - Consolidated
Financial Statements prescribed by Companies (Accounting Standards)
Rules, 2006 as amended from time to time.
5. Based on our audit and on consideration of reports of other
auditors on separate fnancial statements and on 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
ÃSignifcant Accounting Policies and Notes to Accountsà in Schedule XII
and other notes appearing elsewhere in the said accounts, 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 Consolidated Balance Sheet, of the state of affairs
of the 3i Infotech Group as at March 31, 2010;
(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 Lodha & Co. For R.G.N. Price & Co.
Chartered Accountants Chartered Accountants
R.P.aradiya K. Venkatakrishnan
Partner Partner
Membership No.4101 MembershipNo.08591
Firm Registration No:01051E Firm Registration No:02785S
Mumbai. Mumbai.
Date :April 3, 2010 Date :April 3, 2010