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Accelya Solutions India Ltd.

BSE: 532268 Sector: IT
NSE: ACCELYA ISIN Code: INE793A01012
BSE 00:00 | 24 Apr Accelya Solutions India Ltd
NSE 05:30 | 01 Jan Accelya Solutions India Ltd
OPEN 900.10
PREVIOUS CLOSE 908.60
VOLUME 20
52-Week high 1247.00
52-Week low 699.30
P/E 11.87
Mkt Cap.(Rs cr) 1,347
Buy Price 897.10
Buy Qty 100.00
Sell Price 910.25
Sell Qty 3.00
OPEN 900.10
CLOSE 908.60
VOLUME 20
52-Week high 1247.00
52-Week low 699.30
P/E 11.87
Mkt Cap.(Rs cr) 1,347
Buy Price 897.10
Buy Qty 100.00
Sell Price 910.25
Sell Qty 3.00

Accelya Solutions India Ltd. (ACCELYA) - Auditors Report


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Company auditors report

To the Members of

Accelya Solutions India Limited

(Formerly known as Accelya Kale Solutions Limited)

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the standalone financial statements of Accelya Solutions India Limited("the Company") which comprise the standalone balance sheet as at 30 June 2019and the standalone statement of profit and loss (including other comprehensive income)standalone statement of changes in equity and standalone statement of cash flows for theyear then ended and notes to the standalone financial statements including a summary ofthe significant accounting policies and other explanatory information (hereinafterreferred to as " 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 Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 30 June 2019 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

Description of Key Audit Matter

The key audit matter How our audit addressed the key audit matter
Revenue Recognition - Adoption of Ind AS 115 "Revenue from Contracts with Customers" and fixed price development contracts
The Company has adopted Ind AS 115 - Revenue from Contracts with Customers starting 1 July 2018. The application of the new revenue accounting standard involves certain key judgements and principles for evaluating various distinctive terms/matters including new disclosure requirements. Our audit procedures on adoption of Ind AS 115 - Revenue from contracts with Customers ('Ind AS 115') which is the new revenue accounting standard included:
• Evaluating the design and implementation of the processes and internal controls relating to implementation of the new revenue accounting standard.
The key audit matter How our audit addressed the key audit matter
The Company also derives portion of its revenue from long term fixed price development contracts where revenue is recognized using the percentage of completion method based on management's estimates of contract efforts. Estimated effort is a critical estimate to determine revenues for fixed price development contract. This estimate has a high inherent uncertainty as it requires consideration of progress of the contract efforts incurred till date and efforts required to complete the remaining contract performance obligations (Refer Note 2(g) to the standalone financial statements). • Selecting samples of continuing and new contracts and performed the following procedures to assess management analysis and impact of Ind AS 115 adoption:
• Read analyse and identify the distinct performance obligations in these contracts.
• Compare these performance obligations with that identified and recorded by the Company.
• Consider the terms of the contracts and assess the transaction price including any variable consideration to test revenue.
^ Evaluating the appropriateness of the disclosures provided under the new revenue standard and assessed the completeness and mathematical accuracy of the relevant disclosures.
Our audit procedures on revenue recognized from fixed price development contracts includes;
• Evaluating the design of internal controls relating to recording of efforts incurred and estimation of efforts required to complete the performance obligations.
• Testing the access and application controls pertaining to time recording system which prevents unauthorised changes to recording of efforts incurred
• On selected samples of contracts we tested that the revenue recognized is in accordance with the accounting standard by :
• Evaluating the identification of performance obligation.
• Testing management's calculation of the estimation of efforts required to complete the contract and onerous obligation if any.
• Observed that the estimates of time required to complete were reviewed and approved by appropriate levels of management;
• Performed a retrospective review of efforts incurred with estimated efforts to identify significant variations and verify whether those variations have been considered in estimating the remaining efforts to complete the contract;
• Performed test of details including analytics to determine reasonableness of incurred and estimated efforts.
The key audit matter How our audit addressed the key audit matter
Capitalisation of internal product development costs
The Company capitalises costs incurred in developing/ upgrading its software products to launch new service modules and functionality to provide an enhanced suite of services to its customers. During the year the Company capitalised product development cost of ' 105702741. Our audit procedures included:
• Evaluating the design and operating effectiveness of the Company's key controls relating to capitalisation of internal product development cost.
• Examining the capitalised costs to determine the nature of cost and assess whether the costs met the capitalization criteria.
The costs mainly comprised of payroll and external consultant cost. Refer Note 2 (e) to the standalone financial statements.
The capitalization of internal product development costs was a key audit matter due to size of the internal costs capitalized and the judgment involved in assessing whether the costs met the criteria for capitalisation. • Tested samples of employee and external consultants to assess the capacity in which they were employed and performed a recalculation of cost capitalized from the remuneration paid.

Other Information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditors'report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Management's Responsibility for the Standalone Financial Statements

The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

(A) 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 purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act.

e) On the basis of the written representations received from the directors as on 30June 2019 taken on record by the Board of Directors none of the directors aredisqualified as on 30 June 2019 from being appointed as a director in terms of Section164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 30 June 2019 onits financial position in its standalone financial statements - Refer Note 43 to thestandalone financial statements.

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses on long-term contracts including derivativecontracts- Refer Note 48 to the standalone financial statements.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 30 June 2019.

(C) With respect to the matter to be included in the Auditors' Report under section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Rajiv Shah
Partner
Place : Thane Membership No: 112878
Date : 28 August 2019 ICAI UDIN: 19112878AAAAAU2829

Annexure A to the Independent Auditor's Report

With reference to the Annexure A referred to in the Independent Auditors' Report to themembers of the Company on the standalone financial statements for the year ended 30 June2019 we report the following:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;

(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified annually. In our opinion this periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme all fixed assets were physically verified during theyear and no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable propertiesincluded in fixed assets are held in the name of the Company.

(ii) The Company is a service company primarily rendering information technology andrelated services. Accordingly it does not hold any physical inventories. Thus paragraph3(ii) of the Order is not applicable to the Company.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013 ("the Act.") Accordingly the provisions of clause 3(iii)(a) (b) and (c) of the Order are not applicable to the Company.

(iv) According to the information and explanations given to us there are no loansinvestments guarantees and security given in respect of which provisions of section 185and 186 of the Act are applicable. Accordingly paragraph 3(iv) of the Order is notapplicable to the Company.

(v) The Company has not accepted any deposits from the public within the meaning thedirectives issued by the Reserve Bank of India as per the provisions of Sections 73 to76 any other relevant provisions of the Act and rules framed thereunder.

(vi) The Central Government has not prescribed the maintenance of cost records undersection 148 of the Act for any of the services rendered by the Company.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Employees' StateInsurance Income-tax Goods and Service Tax duty of Customs Cess and any other materialstatutory dues have been regularly deposited during the year with the appropriateauthorities.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' State Insurance Income-tax Goods andService Tax duty of Customs Cess and other material statutory dues were in arrears as at30 June 2019 for a period of more than 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 Goods and Service tax duty of Customs and Value addedtax which have not been deposited by the Company on account of any dispute except thefollowing:

Name of the statute Nature of the dues Amount (') Period to which the amount relates Forum where dispute is pending
The Finance Act 1994 Service tax under Reverse Charge Mechanism 56904736** Financial year 2011-12 to 2014-15 Customs Excise and Service Tax Appellate Tribunal (CESTAT) Maharashtra
**Net of amount deposited with authorities amounting to ' 2217068

(viii) According to the information and explanations given to us the Company did nothave any outstanding loans or borrowings from any financial institution or bank orgovernment or dues to debenture holders during the year.

(ix) In our opinion and according to the information and explanations given to us theCompany did not raise any money by way of initial public offer or further public offer(including debt instruments) and term loans during the year. Accordingly paragraph 3(ix)of the Order is not applicable to the Company.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no material fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the course of our audit.

(xi) In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company the Company has paid or providedfor managerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us in our opinion theCompany is not a Nidhi Company as prescribed under Section 406 of the Act. Accordinglyparagraph 3(xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company all transactions with the related parties arein compliance with sections 177 and 188 of the Act where applicable and details of suchrelated party transactions have been disclosed in the standalone financial statements asrequired by the applicable accounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable to the Company.

(xvi) According to the information and explanation given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Rajiv Shah
Partner
Place : Thane Membership No: 112878
Date : 28th August 2019 ICAI UDIN: 19112878AAAAAU2829

Annexure B to the Independent Auditors' Report on the standalone financial statementsof Accelya Solutions India Limited (formerly known as Accelya Kale Solutions Limited) forthe year ended 30 June 2019

Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 ("the Act")

(Referred to in paragraph 1(A)(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference to standalone financialstatements of Accelya Solutions India Limited ("the Company") as of 30 June 2019in conjunction with our audit of the standalone financial statements of the Company forthe year ended on that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 30 June 2019 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing 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 judgement 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 withreference to financial statements.

Meaning of Internal Financial Controls with Reference to Financial Statements

A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements 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 unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with Reference to FinancialStatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Rajiv Shah
Partner
Place : Thane Membership No: 112878
Date : 28th August 2019 ICAI UDIN: 19112878AAAAAU2829