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3i Infotech Ltd.

BSE: 532628 Sector: IT
NSE: 3IINFOTECH ISIN Code: INE748C01020
BSE LIVE 15:40 | 02 Dec 5.52 -0.22
(-3.83%)
OPEN

5.70

HIGH

5.70

LOW

5.47

NSE LIVE 15:50 | 02 Dec 5.55 -0.15
(-2.63%)
OPEN

5.70

HIGH

5.70

LOW

5.45

OPEN 5.70
PREVIOUS CLOSE 5.74
VOLUME 241768
52-Week high 7.20
52-Week low 3.75
P/E
Mkt Cap.(Rs cr) 496.18
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 5.70
CLOSE 5.74
VOLUME 241768
52-Week high 7.20
52-Week low 3.75
P/E
Mkt Cap.(Rs cr) 496.18
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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 31st March 2015 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 thereunder.

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 but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of 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

(i) in the case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2015;

(ii) in the case of the Statement of Profit and Loss of the loss of the Company forthe year ended on that date and

(iii) in the case of the Cash Flow Statement of the cash flows of the Company for theyear ended on that date.

Emphasis of Matter:

Without qualifying we draw attention to the following:

a) Going Concern and Impairment analysis:

(i) During the financial year 2011-12 the Company undertook restructuring of its debtsthrough CDR cell and also renegotiated with the Foreign Currency Convertible Bond (FCCB)holders with respect to its obligations. Post the debts restructuring there have beensubstantial delays in repayment of Principal and payment of Interest in respect of CDRlenders as well as for the interest on the FCCB which may be construed as Default as perthe Master Restructuring Agreement (MRA) and the terms of FCCB. The Company is negotiatingwith the aforesaid lenders as also with the lease financiers to restructure the debt andis reasonably certain to renegotiate and meet its financial obligations.

(ii) The Company as per itsAccounting Policy and in accordance with the requirementsoftheAccounting 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 accordinglyprovision for diminution in value of long term investments (subsidiaries) of '350 crores(Previous year Rs Nil) has been made. Besides the Companyhasprovided for'305.79croresonaccountofdivestmentofstakeinstep down subsidiaries during theyear. Pending negotiationswith lenders and restructuring of business the Company has prepared the financialstatements on a going concern basis which is dependent inter alia upon the positiveoutcome of negotiations with lenders restructuring of business and infusion of funds.

(Refer note no.2.26.1 and 2.26.2 of the standalone financial statements)

b) In respect of justification of carrying deferred tax assets recognized in earlieryears of '121.33 crores (Previous year '121.33 crores) the management based on theconfirmed order book on hand and relying on the restructuring scheme as mentioned in para(a) (i) above is confident of having sufficient taxable income in the foreseeable futureenabling reversal of the said deferred tax assets.

(Refer note no.2.11 of the standalone financial statements)

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2015 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure a statement on the matters specified in paragraphs 3 and4 of the Order.

2. As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the 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 31stMarch 2015 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2015 from being appointed as a director in terms of Section164 (2) of the Act.

f) 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 opinion and to the best of ourinformation 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 2.25.1 of the standalonefinancial statements).

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

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

For Lodha & Company
Chartered Accountants
Firm Registration No. 301051E
R.P. Baradiya
Place: Mumbai Partner
Date : 28th May 2015 Membership No. 44101

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF 3i INFOTECHLIMITED ON THE STANDALONE FINANCIAL STATEMENTS

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 equipment and Computers atfive locations which in our opinion is reasonable considering the size of the Company andnature of its fixed assets. The discrepancies noticed on such verification have been dealtwith in the books of accounts.

2. (a) As explained to us the inventories (hardware held for rendering services) werephysically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the Management werereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) In our opinion and according to the information and explanations given to us theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.

3. As informed the Company has not granted/taken any loans secured or unsecuredto/from companies firms or other parties covered in the register maintained under section189 of the Act.

4. In our opinion and according to the information and explanations given to us havingregard to the explanations that some of the items of purchase and sale are of specialnature and suitable alternative sources do not exist for obtaining comparable quotationsthere are adequate internal control systems commensurate with the size of the Company andthe nature of its business for the purchase of inventories and fixed assets and for thesale of goods and services. During the course of our audit no major weakness has beennoticed in the internal control systems.

5. In our opinion and according to the information and explanations given to us theCompany has not accepted any public deposits within the meaning of Section 73 to 76 or anyother relevant provisions of the Act and rules framed thereunder.

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 substantial delays in payment of various statutory dues such as income tax salestax profession tax and service tax. However as at the close of the year there were noarrears outstanding for a period of more than six months from the date they become payableexcept in respect of Tax Deducted at Source of Rs 1.52 lacs.

b) According to the information and explanations given to us there are no dues ofIncome Tax Sales Tax Service Tax Custom Duty Wealth tax Excise Duty and Cess whichhave 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 2009-10 32.77 Sales Tax Officer
UP VAT Act 2008 Sales Tax Financial Year 2009-10 and 2010-11 0.10 The Assistant Commissioner Commercial Taxes
AP VAT Act 2005 Sales Tax Financial Year 2009-10 and 2010-11 0.68 Appellate Deputy Commissioner
Income Tax Act 1961 Income Tax Assessment Year 2004-05 1.00 Commissioner of Income Tax (Appeals)
Name of Statute Nature of Demand Period to which amount Relates Rs in crores Forum where dispute is pending
Income Tax Act 1961 Assessment Year 2008-09 5.19 Income Tax Appellate Tribunal
Assessment Year 2007-08 2.83
Assessment Year 2006-07 0.18
Finance Act1994 Service Tax Financial year 2004-05 to 2009-10 2011-12 2012-13 158.99 Commissioner of Service Tax
Financial year 2010-11 19.47 Assistant Commissioner of Service Tax

b) There were no delays in amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.

8. The Company's accumulated losses at the end of the financial year have exceeded 50%of its net-worth. It has incurred cash losses in the current year under review and in theimmediately preceding financial year.

9. During the year there have been defaults in repayment of dues to the banks financial institutions and debenture holders as per details hereunder:

Particulars

Principal

Interest

Amount (Rs in crores) Delay in months Amount (Rs in crores) Delay in months
Banks 100.59 1-17 123.46 1-12
Finance Lease (Banks) 29.99 1-44 6.72 1-44
Debenture holders- FCCB Nil Nil 14.59 4-8

10. In our opinion and according to the information and explanations given to us theterms and conditions on which the Company has given guarantees for loans taken by othersfrom banks and financial institutions are not prima facie prejudicial to the interest ofthe Company.

11. In our opinion and according to the information and explanations given to us theterm loans were applied for the purposes for which they were obtained.

12. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing standards in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud on or by the Company noticed or reported during the year nor have webeen informed of such case by the management.

For Lodha & Company
Chartered Accountants
Firm Registration No. 301051E
R.P. Baradiya
Place: Mumbai Partner
Date : 28th May 2015 Membership No. 44101

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