The Members of DATAMATICS GLOBAL SERVICES LIMITED
Report on the Standalone Financial Statements
We have audited accompanying standalone financial statements of DATAMATICS GLOBALSERVICES LIMITED ("the Company") which comprise the Balance Sheet as atMarch 31 2016 and the Statement of Profit and Loss and Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and otherexplanatoryinformation.
Managements Responsibility for the Financial Statements
The Companys Board of Directors is responsible for the matters stated in Section134(5) of Companies Act 2013 ("the Act") with respect to the preparation andpresentation of these standalone financial statements that give a true and fair view ofthe financial position financial performance and cash flows of the Company in accordancewith the Accounting Principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
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 accordancewith the Standards on Auditing specifiedunder Section 143(10) of the Act. Those Standardsand pronouncements require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financialstatements.
The procedures selected depend on the auditors judgment including the assessmentof the risks of material misstatement of the financial statements whether due to fraud orerror. In making those risk assessments the auditor considers internal financial controlrelevant to the Companys preparation of the financial statements that give a trueand fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by theCompanys Directors as well as evaluating the overall presentation of the financialstatements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on standalone financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India: a) in the case of the Balance Sheet ofthe state of affairs of the Company as at March 31 2016; b) in the case of the Statementof Profit and Loss of the Profit for the year ended on that date; and c) in the case ofCash Flow Statement of the Cash Flows for the year ended on that date.
Emphasis of Matter a) Attention is drawn to Note No.39 the Company has aninvestment of Rs. 670.18 million in three of its wholly owned subsidiaries and alsoextended loans and advances of Rs. 0.89 million to these subsidiaries as on March 312016. The net worth of these subsidiaries has declined. We are given to understand thatthese investments are for long term and of strategic nature and the management areconfident of turning around the subsidiaries in the near future. In view of this we areunable to comment on whether provision if any for the diminution in the value ofinvestments is required to be made. b) Attention is drawn to Note No. 43 DatamaticsGlobal Services GmbH a subsidiary company along with its subsidiary Datamatics GlobalServices Solutions GmbH has filed for voluntary winding up / liquidation / de-registrationprocedure on June 15 2015. As informed to us the winding up procedure generally takes atleast a year. Management has estimated a diminution in value of investments to the extentof Rs. 65.66 million which is not temporary in nature as the subsidiary and step downsubsidiary companies are currently carrying on its operations prior to closing ascontractually / statutorily required. Based on the judgment and estimation of themanagement the said investment has been stated at cost (i.e. Rs. 195.95 million) lessprovision for diminution in value of investment of Rs. 65.66 million as at March 31 2016.
Report on other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 issuedby the Central Government of India in terms of subsection (11) of section 143 of the Act(hereinafter referred to as the "Order") and on the basis of such checks of thebooks and records of the Company as we considered appropriate and according to theinformation and explanations given to us we give in the "Annexure A" astatement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by section 143(3) of the Act we report that: a) We have obtained allthe information and explanations which to the best of our knowledge and belief werenecessary for the purpose of our audit. b) In our opinion proper books of account asrequired by law have been kept by the Company so far as appears from our examination ofthose books. c) The Balance Sheet the Statement of Profit and Loss and Cash FlowStatement dealt with by this report are in agreement with the books of account. d) In ouropinion the Balance Sheet the Statement of Profit and Loss and Cash Flow Statementcomply with the Accounting Standards specified under section 133 of Companies Act 2013read with rule 7 of the Companies (Accounts) Rules 2014. e) On the basis of the writtenrepresentations received from the directors as on March 31 2016 and taken on record bythe Board of Directors we report that none of the directors is disqualified as on March31 2016 from being appointed as a director in terms of Section 164(2) of the CompaniesAct 2013. 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 B"; and g) With respect to the other mattersto be included in the Auditors Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules 2014 in our opinion and to the best of our information andaccording to the explanations given to us: i. The Company has disclosed the impact ofpending litigations on its financial position in its financial statements - Refer Note26(a) to the financial statements; ii. The Company did not have any material foreseeablelosses on long-term contracts including derivatives contracts. iii. There has been nodelay in transferring amounts required to be transferred to the Investor Education andProtection Fund by the Company during the year ended March 31 2016.
For Kanu Doshi Associates LLP
Firm Registration Number: 104746W/W100096
Membership No: 105654
Date: May 27 2016
Annexure A to the Auditors Report
Referred to in paragraph 1 of Report on other Legal and RegulatoryRequirements in our Report of even date on the accounts of
DATAMACTICS GLOBAL SERVICES LIMITED for the year ended March 31 2016 i. (a) TheCompany is generally maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) As explained to us fixed assets have been physically verified by the management atreasonable intervals during the year and no material discrepancies were noticed on suchverification.
(c) On the basis of our examination and as explained to us the title deeds ofimmovable properties are held in the name of the Company. ii. The Companys nature ofoperations does not require it to hold inventories. Consequently clause 3(ii) of theorder is not applicable. iii. As informed to us the Company has not granted loanssecured or unsecured to companies firms limited liability partnerships or other partiescovered in the register maintained under section 189 of the Act. Hence sub clauses (a) and(b) of clause 3(iii) of the order are not applicable to the Company. iv. According toinformation and explanation provided to us in respect of loans investments guaranteesand securities the Company has complied with the provisions of Section 185 and 186 of theCompanies Act 2013. v. The Company has not accepted any deposits from the public withinthe meaning of Sections 73 74 75 and 76 of the Act and the rules framed there under tothe extent notified and therefore clause(v)is . not applicable vi. The Central Governmenthas not prescribed the maintenance of cost records under sub-Section (1) of Section 148 ofthe Companies Act for any of the products of the Company. vii. (a) The Company isgenerally regular in depositing with appropriate authorities undisputed statutory duesincluding provident fund employees state insurance income tax sales tax servicetax duty of custom duty of excise value added tax cess and other material statutorydues applicable to it. According to the information and explanations given to us noundisputed arrears of statutory dues were outstanding as at March 31 2016 for a period ofmore than six months from the date they became payable.
(b) The disputed statutory dues aggregating Rs. 17.23 million pending before theappropriate authorities are as under:
|Sr. No. ||Name of the Statute ||Nature of the dues ||Forum where the dues is pending ||Rs. in million |
|1 ||Income Tax ||Income Tax ||ACIT AY 2012-13 ||12.16 |
|2 ||Sales Tax Act ||Sales Tax ||Ass. Commissioner of Sales Tax ||5.07 |
| || || ||Total ||17.23 |
viii. According to the records of the Company examined by us and information andexplanation given to us the Company has not defaulted in repayment of dues to financialinstitution bank or debentureholders as at the Balance Sheet date. ix. The Company hasnot raised any moneys by way of public issue / further offer including debt instruments.The moneys raised on term loans have been applied for the purpose for which it was raised.x. To the best of our knowledge and according to the information and explanation given tous no fraud by the Company and no fraud on the Company by its officers or employees hasbeen noticed or reported during the year. xi. The managerial remuneration paid by theCompany is in accordance with the requisite approvals mandated by the provisions ofsection 197 read with schedule V to the Companies Act 2013. xii. The Company is not aNidhi Company.
xiii. The Company has complied with the provisions of section 177 and 188 of theCompanies Act 2013 in respect of transactions with the related parties and has disclosedthe details in the Financial Statements in accordance with the accounting standards. xiv.The Company has not made any preferential allotment or private placement of shares or hasfully or partly convertible debentures during the year under review. xv. The Company hasnot entered into any non-cash transactions with directors or persons connected todirectors during the year under review. xvi. According to the information and explanationsgiven to us the Company is not required to obtain registration under section 45 IA of theReserve Bank of lndia Act 1934 and therefore clause XVI is not applicable.
For Kanu Doshi Associates LLP
Firm Registration Number: 104746W/W100096
Membership No: 105654
Date: May 27 2016
Annexure B to the Auditors Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial DATAMATICS GLOBALSERVICES LIMITED reportingof ("the Company") as of March 31 2016 inconjunction with our audit of the financial statements of the Company that date.
Managements Responsibility for Internal Financial Controls
The Companys Board of Directors are responsible for establishing and maintaininginternal financial controls based on the internal control over financialreporting 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). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly andefficientconduct of its business including adherence to Companys policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation of reliablefinancial information as required under the Companies Act 2013.
Our responsibility is to express an opinion financialreporting based ontheCompanysinternal our audit.
We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting (the "Guidance Note") and theStandards on Auditing issued by ICAI and deemed to be prescribed under section 143(10) ofthe Companies Act 2013 to the extent applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 auditors 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 Companys internal financial controlssystem over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A Companys internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detailaccuratelyandfairlyreflectthetransactions 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 thecompanys 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 financial theinternal financial control over financial reporting may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financialfinancialreporting were operating effectively as at March 31 2016 based on the internalcontrolsover control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
For Kanu Doshi Associates LLP
Firm Registration No: 104746W/W100096
Membership No: 105654
Date: May 27 2016