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3i Infotech Ltd.

BSE: 532628 Sector: IT
NSE: 3IINFOTECH ISIN Code: INE748C01020
BSE LIVE 15:58 | 23 Jun 4.19 -0.07
(-1.64%)
OPEN

4.25

HIGH

4.35

LOW

4.16

NSE 15:51 | 23 Jun 4.15 -0.05
(-1.19%)
OPEN

4.25

HIGH

4.40

LOW

4.15

OPEN 4.25
PREVIOUS CLOSE 4.26
VOLUME 705757
52-Week high 7.20
52-Week low 4.16
P/E 5.66
Mkt Cap.(Rs cr) 522
Buy Price 0.00
Buy Qty 0.00
Sell Price 4.19
Sell Qty 4500.00
OPEN 4.25
CLOSE 4.26
VOLUME 705757
52-Week high 7.20
52-Week low 4.16
P/E 5.66
Mkt Cap.(Rs cr) 522
Buy Price 0.00
Buy Qty 0.00
Sell Price 4.19
Sell Qty 4500.00

3i Infotech Ltd. (3IINFOTECH) - Auditors Report

Company auditors report

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(“the Company”) which comprise the Balance Sheet as at March 31 2016 theStatement of Profit and Loss the Cash Flow Statement for the year then ended and asummary 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 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 and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor’s Responsibility

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

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the 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.

Opinion

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 state of affairs of the Companyas 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 inview of expected continued support of the lenders and also meeting its financialobligations based on the projected operational performance in terms of the DebtRestructuring Scheme (DRS) approved in April 2016. Also refer note no. 2.30 of thestandalone financial statements.

b) Impairment Analysis and Additional amortisation/depreciation:

(i) The Company as per its Accounting Policy and in accordance with the requirementsof 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 animpairment analysis of its Cash Generating Units / Long term Investments on a goingconcern basis with the assistance of an independent expert valuer and accordingly duringthe year has made provision for impairment loss of ' 150 crores (Previous year ' 350crores). Besides the Company has provided for ' 44.25 crores (Previous year ' 305.79crores) on account of divestment of stake/diminution in value of investments during theyear. Also refer note no. 2.29 of the standalone financial statements.

(ii) The Company has on evaluation amortised/provided additional depreciationaggregating to ' 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 (“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” a statement on the matters specified inparagraphs 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 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 Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

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

(e) On the basis of the written representations received from the directors as on March31 2016 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of Section 164 (2) of theAct.

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in “Annexure B”.

(g) With respect to the other matters to be included in the Auditor's 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 on its financialposition in its standalone financial statements.(Refer note no 2.26.1 to the standalonefinancial statements)

ii. The Company has made provision as required under the applicable accountingstandards for material foreseeable losses on long term contracts.

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

For LODHA & CO.
Chartered Accountants
Firm Registration No. 301051E
R.P. Baradiya
Place: Mumbai Partner
Date : August 11 2016 Membership No. 44101

ANNEXURE REFERRED TO IN PARAGRAPH “REPORT ON OTHER LEGAL AND REGUALTORYREQUIREMENTS” OF OUR REPORT TO THE MEMBERS OF “THE COMPANY”FOR THE YEARENDED MARCH 31 2016

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:

1. 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 Furniture & Fixtures Office equipment Plant and Machinery and Computers atsix locations which in our opinion is reasonable considering the size of the Company andnature of its fixed assets. Pursuant to the program physical verification of fixed assetshas been carried out during the year and no material discrepancies were noticed on suchverification.

c) Based on the information and explanations given to us the title deeds of immovableproperties are held in the name of the Company.

2. As per the information and explanations given to us the inventories (hardware heldfor rendering services) were physically verified during the year by the management atreasonable intervals and no material discrepancies were noticed on such physicalverification.

3. The Company has granted (taking over of lenders liability of wholly ownedsubsidiaries in terms of DRS scheme) unsecured loan to 3 companies covered in the registermaintained under Section 189 of the Act. There are no firms / LLPs/ other parties coveredin the register maintained under Section 189 of the Act.

(a) In respect of the aforesaid loans the terms and conditions under which such loanswere granted are not prejudicial to the Company's interest.

(b) In respect of the aforesaid loans 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 as applicable.

(c) In respect of the aforesaid loans there is no amount which was due during theyear.

4. 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.

5. No deposits have been accepted by the Company within the meaning of directivesissued by Reserve Bank of India (RBI) and Sections 73 to 76 or any other relevantprovisions of the Act and rules framed there under.

6. To the best of our knowledge and as explained the Central Government has notprescribed maintenance of cost records under Section 148 (1) of the Act for the servicesrendered 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 therewere delays in payment of various statutory dues such as income tax sales tax professiontax and service tax. However as at the close of the year there were no arrearsoutstanding 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 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 :

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
Name of Statute Nature of Demand Period to which amount Relates Rs. in Crores Forum where dispute is pending
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
Financial year 2004-05 to 2009-10 2011-12 2012-13 158.99 Commissioner of Service Tax
Finance Act1994 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 theMaster 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.

9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) during the year or in the recent past. Based on theinformation and explanations given to us by the management term loans were applied forthe purpose for which the loans were obtained.

10. 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 or employees noticed or reportedduring 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 ourexamination of the records the Company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V of the Act.

12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Therefore the provisions of clause 3(xii) of the Orderare not applicable to the Company.

13. 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 all transactions with therelated party are in compliance with Section 177 and 188 of the Act and the details havebeen disclosed as required by the applicable Accounting Standard (Refer note no 2.35 tothe Standalone Financial Statements).

14. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year. Therefore the provisions ofclause 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 enteredinto any non-cash transactions prescribed under Section 192 of the Act with directors orpersons connected with them during the year.

16. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For Lodha & Company
Chartered Accountants
Firm Registration No. 301051E
R.P. Baradiya
Place: Mumbai Partner
Date : August 11 2016 Membership No. 44101

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 reporting of 3i InfotechLimited (“the Company”) as of March 312016 in conjunction with our audit of thefinancial 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 internalfinancial controls 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.

Auditors' Responsibility

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 financial statements whether due to fraud or error.

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 assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2)provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 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.

Opinion

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 312016 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 Lodha & Company
Chartered Accountants
Firm Registration No. 301051E
R.P. Baradiya
Place: Mumbai Partner
Date : August 11 2016 Membership No. 44101