The Members of 3i Infotech Limited
Report on Standalone Financial Statements
We have audited the accompanying standalone financial statements of "3i InfotechLimited" ("the Company") which comprise the Balance Sheet as at March 312018 the Statement of Profit and Loss (including other comprehensive income) Statementof Cash Flows and the Statement of Changes in Equity for the year then ended and asummary of 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 Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity of the Company in accordance with thethe Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act readwith the Companies (Indian Accounting Standard) Rules 2015 as amended and otheraccounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancialstatements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Our responsibility is to express an opinion onthesestandalonefinancial . statementsbased on our audit We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made there under and the Order issued underSection 143(11) of the Act.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone financial statements are free from material misstatement. An audit involvesperforming procedures to obtain audit evidence about the amounts and the disclosures inthe standalone financial statements. The procedures selected depend on the auditor'sjudgment assessment of the risks of material misstatement of the standalone financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thestandalone financialstatements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances.
An audit also includes evaluating the appropriateness of the accounting policies usedand the reasonableness of the accounting estimates made by the Company's Directors aswell as evaluating the overall presentation of the standalone financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the financial position of theCompany as at March 31 2018and its financial performance including other comprehensiveincome 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 paidto the Managing Director and Global CEO of the Company which was in excess of the limitsprescribed under Section 197 of the Act and was subject to the approval of the CentralGovernment for the financial year 2016-17.
Our Opinion is notqualifiedforabove matters.
Report on Other Legal and Regulatory Requirements
1. 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 ofthe Act we give in the "Annexure A" statement on the matters specified inparagraphs 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 bestof 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 theCompany so far as appears from our examination of those books;
(c) The Balance Sheet Statement of Profit and Loss (including other comprehensiveincome) the Statement Cash Flow and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account;
(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards prescribed under Section 133 of the Act;
(e) On the basis of the written representations received from the directors as on 31stMarch 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2018 from being appointed as a director in terms ofSection 164(2) of the Act.
(f) With respect to adequacy of internal financial controls over financial reporting ofthe Company and the operating effectiveness of such controls refer to our separate reportin "Annexure B"; and
(g) In our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respect to other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules2014:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements. Refer Note No. 30 to the standalonefinancial statements
ii. The Company has made provision as required under the applicable law or accountingstandard for material foreseeable losses if any on long term contracts.
iii. There has been no delay in transferring amounts which were required to betransferred to the Investor Education and Protection Fund by the Company.
For GMJ & Company
FRN : 103429W
CA Sanjeev Maheshwari
Membership No. 38755
Date: April 23 2018
ANNEXUREREFERREDTOINPARAGRAPH"REPORTONOTHERLEGALANDREGUALTORYREQUIREMENTS" OFOUR REPORT TO THE MEMBERS OF "THE COMPANY"FOR THE YEAR ENDED MARCH 31 2018
On the basis of such checks as we considered appropriate and according to theinformation 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 includingquantitative details and situation of fixed assets.
b) During the year the Company in accordance to a phased programme has physicallyverified Fixtures Office equipment Plant and Machinery and Computers at six locationswhich in our opinion is reasonable considering the size of the Company and nature of itsfixed assets. According to information and explanations given to us no materialdiscrepancies were noticed on such verification.
c) Based on the information and explanations given to us the title deeds of immovableproperties are held in the name of the Company except in respect of immovable propertiesof Land & Building that have been taken on lease and disclosed as fixed assets in Note3 to the standalone and Ind AS financialstatements title deeds of the same are inerstwhile 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. Accordinglyparagraph 3(ii) of the Order is not applicable to the Company.
(iii) The Company had granted loans in the previous years (taking over of lendersliability of wholly owned subsidiary in terms of DRS Scheme) to 3 body corporate coveredin the register maintained under section 189 of the Act.
a) During the year the Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Act. Accordingly paragraph 3(iii)(a) of the Order isnot applicable.
b) In respect of existing loans outstanding the schedule of repayment of principal andinterest has been stipulated and the parties are repaying the principal amounts asstipulated and also regular in payment of interest.
c) In respect of existing loans outstanding there is no amount which was overdueduring the year.
(iv) In our opinion and according to the information and explanations given to us theCompany has not advanced any loan provided guarantee and security covered in Section 185of the Act. The Company has complied with the provisions of Section 186 of the Act to theextent applicable with respect to the loans and investments made guarantees given andsecurity provided.
(v) The Company has not accepted deposits from public within the meaning of directivesissued by RBI (Reserve Bank of India) and Sections 73 to 76 or any other relevantprovisions of the Act and rules framed there under.
(vi) The Central Government has not prescribed the maintenance of cost records underSection 148 (1) of the Act for any of the services rendered by the Company. Accordinglyparagraph 3(vi) of the Order is not applicable.
(vii) a) According to the information and explanations given to us and on the basis ofexamination of records the Company is generally regular in depositing amounts deducted/accrued in respect of undisputed statutory dues including provident fund income taxsales tax value added tax duty of customs service tax cess and other materialstatutory dues. As explained to us the Company did not have any dues on account ofemployees' state insurance and duties of excise.
According to the information and explanations given to us and on the basis ofexamination of records of the Company no undisputed amounts payable in respect ofprovident fund income tax sales tax value added tax duty of customs service tax cessand other material statutory dues were in arrears as at March 31 2018 for a period morethan six months from the date they became payable.
b) According to the information and explanations given to us there are no dues ofIncome Tax Sales Tax Service Tax Duty of Customs Duty of Excise and Value added Taxwhich 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 Act2002 ||Sales Tax ||Financial Year 2005- 06 2006-07 ||2.06 ||- ||2.06 ||Sales Tax Officer |
|Karnataka Sales Tax Act 1957 ||Sales Tax ||Financial Year 2009- 10 ||3.89 ||2.04 ||1.85 ||Appellate Deputy Commissioner |
|AP VAT Act2005 ||Sales Tax ||Financial Year 2009- 10 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 2004- 05 to 2006-07 2006-07 2012-13 ||2.81 ||0.21 ||2.6 ||Commissioner (Appeal) |
| || ||Financial Year 2004-05 to 2008- 092009-10 2010- 11 2011-12 ||168.81 ||- ||168.81 ||CESTAT |
| || ||Financial year 2014- 15 and 2015-16 ||1.04 ||- ||1.04 ||Additional Commissioner of GST & C. Ex |
| || ||Financial Year 2004- 05 & 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 tothe Master Restructuring Agreement dated March 30 2012 with the lenders and as per therevised terms of the Foreign Currency Convertible Bonds (FCCB) there is no default inrepayment 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 furtherpublic offer (including debt instruments) during the year or in the recent past. Based onthe information and explanations given to us by the management term loans were appliedfor the purpose for which the loans were obtained.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by or on the Company by its officers noticed or reported during theyear nor have we been informed of such case by the management.
(xi) According to the information and explanations given to us and based on ourexamination of the records during the year the Company has paid managerial remunerationas per the limits prescribed under Section 197 of the Act. However in respect ofremuneration paid to the Managing Director and Global CEO of the Company which was inexcess of the limits prescribed under Section 197 of the Act and was subject to theapproval of the Central Government for the financial year 2016-17.
(xii) According to the information and explanations given to us the Company is not aNidhi Company. Therefore the provisions of clause 3(xii) of the Order are not applicableto the Company.
(xiii) According to information and explanations given us and based on our examinationof the records of the Company all transactions with the related parties are in compliancewith Sections 177 and 188 of the Act and details of such transactions have been disclosedin the standalone financial AS 24 Related Party Disclosures specified under Section 133of the Act read with the relevant rules issued thereunder. Refer Note 31 to the standalonefinancial statements.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year. Therefore theprovisions 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 examinationof records of the Company the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly paragraph 3 (xv) of the Order is notapplicable; (xvi) The Company is not required to be registered under Section 45-IA of theReserve Bank of India Act 1934. Accordingly paragraph 3 (xvi) of the Order is notapplicable.
For GMJ & Company Chartered Accountants
FRN : 103429W
CA Sanjeev Maheshwari
Partner Membership No. 38755
Date: April 23 2018
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act
We have audited the internal financial controls over financial of March 31 2018 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancialcontrols based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing deemed to be prescribedunder Section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of internal financial controls and bothissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assuranceregardingthereliability of financial of standalonefinancial for external purposes in accordance with generally accepted accountingprinciples. A company's internal financial control over financial reporting includes thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the company; (2)provide reasonable assurance thattransactions are recorded as necessary to permit preparation of standalonefinancialstatements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the standalonefinancial satements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For GMJ & Company Chartered Accountants
FRN : 103429W
CA Sanjeev Maheshwari
Partner Membership No. 38755
Date: April 23 2018