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Xchanging Solutions Ltd.

BSE: 532616 Sector: IT
NSE: XCHANGING ISIN Code: INE692G01013
BSE 00:00 | 24 Apr Xchanging Solutions Ltd
NSE 05:30 | 01 Jan Xchanging Solutions Ltd
OPEN 40.00
PREVIOUS CLOSE 40.80
VOLUME 753
52-Week high 65.00
52-Week low 25.00
P/E 18.39
Mkt Cap.(Rs cr) 432
Buy Price 38.80
Buy Qty 22.00
Sell Price 39.50
Sell Qty 47.00
OPEN 40.00
CLOSE 40.80
VOLUME 753
52-Week high 65.00
52-Week low 25.00
P/E 18.39
Mkt Cap.(Rs cr) 432
Buy Price 38.80
Buy Qty 22.00
Sell Price 39.50
Sell Qty 47.00

Xchanging Solutions Ltd. (XCHANGING) - Auditors Report


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Company auditors report

TO THE MEMBERS OF XCHANGING SOLUTIONS LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements ofXchanging Solutions Limited ("the Company") which comprise the Balance Sheet asat March 31 2019 and the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Cash Flows and the Statement of Changes in Equity for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019and its profit total comprehensive income its cash flows and the changes in equity forthe year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under Section 143(10) of the Act(SAs). Our responsibilities under those Standards are further described in theAuditor's Responsibility for the Audit of the Standalone Financial Statements Sectionof our report. We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Sr. No. Key Audit Matter Auditor's Response
1. Assessment of impairment on investment in subsidiary Principal Audit Procedures
As described in Note 6 of the Standalone Financial statements the carrying amount of investment in • gaining an understanding of and assessing the impairment testing process implemented by Management.
subsidiary recorded is Rs. 11224 lakhs. The Company recognized impairment loss of Rs. 6045 lakhs as at March 31 2019. The Company identifies whether an impairment indication occurs every year and performs impairment test over investment in subsidiary and 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 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 investment in subsidiary as a key audit matter. • verifying the appropriateness of the model used to calculate value in use as per discounted cash flow method.
• analysing the consistency of cash flow forecasts with Management's latest estimates presented to the Board of Directors as part of the budget process.
• comparing the cash flow forecasts for financial years 2020 to 2024 with the business plans used for prior year impairment testing.
• assessing the methods used to calculate the discount rate applied to the estimated cash flows expected as well as the terminal growth rate used to project the latest prior year expected cash flows to infinity; comparing these rates with market data and external sources and recalculating the rates based on our own data sources.
• assessing sensitivity testing of value in use to a change in the main assumptions used by Management.
Our firm's valuation specialists were involved in this work.
2. Evaluation of uncertain tax positions
The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. Refer Notes 3.1 (ii) and 21 to the Standalone financial statements. • Obtained details of completed tax assessments and demands for the year ended March 31 2019 from management. We involved our internal experts to challenge the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. Additionally we considered the effect of new information in respect of uncertain tax positions as at April 1 2018 to evaluate whether any change was required to management's position on these uncertainties.

Information Other than the Financial Statements and Auditor'sReport Thereon

• The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Boards' Report including Annexures to Board's Report ManagementDiscussion and Analysis Report and Corporate Governance Report including annexures thereonbut does not include the standalone financial statements and our auditor's reportthereon.

• Our opinion on the standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.

• In connection with our audit of the standalone financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the standalone financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.

• If based on the work we have performed we conclude that thereis 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 FinancialStatements

The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the Ind AS and other accounting principles generally acceptedin 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 standalonefinancial statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements management isresponsible 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.

Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibility for the Audit of the Standalone FinancialStatements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal financial control relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under Section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin (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 financialstatements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit wereport that:

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income the Statement of Cash Flows and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act.

e) On the basis of the written representations received from thedirectors as on March 31 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2019 from being appointed as a director in termsof Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over financial reporting.

g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of Section 197(16) of the Actas amended In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of Section 197 of the Act.

h) With respect to the other matters to be included in theAuditor'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 tothe explanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements; ii. The Company did not haveany material foreseeable losses on long-term contracts including derivative contracts.

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

2. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government in terms of Section 143(11) ofthe Act we give in "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Bhavani Balasubramanian
(Partner)
(Membership No. 22156)
Bengaluru May 23 2019

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date)

Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")

We have audited the internal financial controls over financialreporting of Xchanging Solutions Limited ("the Company") as of March 31 2019 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. 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 safeguardingof its 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 Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting of the Company based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") issued by the Instituteof Chartered Accountants of India and the Standards on Auditing prescribed under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls. 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 aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting isa process 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 controlover financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to theexplanations given to us 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 2019 based on thecriteria for internal financial control over financial reporting established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm‘s Registration No.117366W/W-100018)
Bhavani Balasubramanian
(Partner)
Bengaluru May 23 2019 (Membership No. 22156)

ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date)

(i) In respect of property plant and equipment:

(a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of property plant and equipment.

(b) The Company has a program of verification of property plant andequipment to cover all the items in a phased manner over a period of 3 years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets.

No physical verification was carried during the year.

(c) The Company does not have any immovable properties of freehold orleasehold land and building and hence reporting under clause 3 (i) (c) of the Order is notapplicable.

(ii) The Company does not have any inventory and hence reporting underclause 3 (ii) of the Order is not applicable.

(iii) In our opinion and according to the information and explanationsgiven to us the Company has not granted any loans secured or unsecured to companiesfirms Limited Liability Partnerships or other parties covered in the register maintainedunder Section 189 of the Companies Act 2013.

(iv) The Company has not granted any loans made investments orprovided guarantees and hence reporting under clause 3 (iv) of the Order is notapplicable.

(v) The Company has not accepted deposits during the year and does nothave any unclaimed deposits as at March 31 2019 and therefore the provisions of theclause 3 (v) of the Order is not applicable.

(vi) The maintenance of cost records has not been specified by theCentral Government under Section 148 (1) of the Companies Act 2013 for the businessactivities carried out by the Company. Thus reporting under clause 3 (vi) of the Order isnot applicable.

(vii) According to the information and explanations given to us inrespect of statutory dues:

(a) The Company has been generally regular in depositing undisputedstatutory dues including Provident Fund Employees' State Insurance Income-taxGoods and Services Tax cess and other material statutory dues applicable to it with theappropriate authorities.

(b) There were no undisputed amounts payable in respect of ProvidentFund Employees' State Insurance Income-tax Goods and Services Tax cess and othermaterial statutory dues in arrears as at March 31 2019 for a period of more than sixmonths from the date they became payable.

(c) Details of dues of Income Tax which have not been deposited as onMarch 31 2019 on account of disputes are given below:

Nature of Statute Nature of dues Forum where dispute is pending Period to which amount relates Amount (Rs. In lakhs)
Income tax Act 1961 Income Tax Income Tax Financial year 2009-10 6
Appellate Tribunal
Financial year 2012-13 46(*)
Financial year 2013-14 1434(**)

(*) Net of Rs. 39 lakhs paid under protest (**) Net of Rs. 123 lakhspaid under protest

(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in the repayment of loans or borrowings tobanks. The Company has not issued any debentures.

(ix) The Company has not raised moneys by way of initial public offeror further public offer (including debt instruments) or term loans and hence reportingunder clause 3 (ix) of the Order is not applicable.

(x) To the best of our knowledge and according to the information andexplanations given to us no fraud by the Company or no material fraud on the Company byits officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanationsgiven to us the Company has paid/provided managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theCompanies Act 2013.

(xii) The Company is not a Nidhi Company and hence reporting underclause 3 (xii) of the Order is not applicable.

(xiii) In our opinion and according to the information and explanationsgiven to us the Company is in compliance with Section 177 and 188 of the Companies Act2013 where applicable for all transactions with the related parties and the details ofrelated party transactions have been disclosed in the standalone financial statements asrequired by the applicable accounting standards.

(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures andhence reporting under clause 3 (xiv) of the Order is not applicable.

(xv) In our opinion and according to the information and explanationsgiven to us during the year the Company has not entered into any non-cash transactionswith its directors or persons connected to its directors and hence provisions of Section192 of the Companies Act 2013 are not applicable.

(xvi) The Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration. No 117366W/W-100018)
Bhavani Balasubramanian
(Partner)
Bengaluru May 23 2019 (Membership No. 22156)