The Members of GSS INFOTECH LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of GSS INFOTECH LIMITEDwhich comprise the Balance Sheet as at March 31 2017 the Statement of Profit and LossCash Flow Statement for the year then ended and a summary of significant accountingpolicies and other explanatory information.
Management's Responsibility for the 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate Internal Financial Controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit. 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 financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2017 and its Profit and its Cash Flow for the year ended on that date.
Emphasis on Matter
Attention is drawn to Exceptional Items' mentioned in Point No.VI to theStandalone Statement of Profit & Loss amounting to Rs.432448508/-. Out of thisRs.332958406/- is on account of diminution in the value of investments in one overseasstep down subsidiary which is not audited by us and such value is considered solely basedon the Overseas Audited Financial Statements of the US subsidiary Company and the samewas considered and approved by the Company's Board.
Our Opinion is not modified in this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 as amended issued bythe Central Government of India in terms of sub-section (11) of section 143 of the Act wegive in the Annexure Aa statement on the matters specified inparagraphs 3 and 4 of the Order.
2. As required by section 143 (3) of the Act we report that: a. We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit; b. In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books; c. The Balance Sheet the Statement of Profit and Loss and theCash Flow Statement dealt with by this Report are in agreement with the books of account;d. In our opinion the aforesaid financial statements comply with the Accounting Standardsspecified under section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014; e. On the basis of written representations received from the Directors as onMarch 31 2017 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2017 from being appointed as a Director in terms of Section164 (2) of the Act; f. With respect to the adequacy of the Internal Financial Controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in Annexure B; g. With respect to theother matters to be included in the Auditor's Report in accordance with Rule 11 of theCompanies (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 does not haveany pending litigations which would impact its financial position. ii. The Company did nothave any long-term contracts including derivative contracts for which there were anymaterial foreseeable losses. iii. There were no amounts which were required to betransferred to the Investor Education and Protection Fund by the Company; and h. TheCompany had provided requisite disclosures in its financial statements as to holdings aswell as dealings in Specified Bank Notes during the period from 8.11.2016 to 30.12.2016and these are in accordance with the books of accounts maintained by the Company
For and on behalf of
Sarath & Associates
Firm's registration number: 005120S
P Sarath Kumar Place: Hyderabad Partner Date: 29.05.2017 M.No.:021755
Annexure A to the Independent Auditors' Report
Referred to in paragraph 1 under the heading Report on Other Legal &Regulatory Requirement of our report of even date to the financial statements of theCompany for the year ended March 31 2017:
1) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets; (b) The Fixed Assets have beenphysically verified by the management during the year which in our opinion is reasonablehaving regard to the size of the company and nature of its business. There were nodiscrepancies noticed on such verification.
(c) The Company does not have any immovable property. Accordingly the provisions ofclause 3 (i)( c ) of the order are not applicable to the company during the current year.
2) As per the information and explanations given to us the company is a ServiceCompany primarily rendering Information Technology Services and as its business does notinvolve maintenance of inventories Viz. Finished Stores Spare Parts Goods in Processand Raw materials the provisions of Clause 3(ii) of the Order are not applicable to theCompany for the current year.
3) (a) As per the information and explanations given to us the Company had grantedadvances to three parties covered in the Register maintained under Section 189 of the Actyear end outstanding being Rs. 160450018/-.
(b) As per the information and explanations given to us in our opinion the aboveloans are given to fully owned subsidiary companies and does not carry interest or do notspecify any specific repayment schedule and hence is generally repayable on demand.Considering the principal business activities carried out by these fully ownedsubsidiaries which are in line with Company's own business we are on the opinion thatthe terms and conditions on which these interest free loans have been granted to partieslisted in the register maintained under Section 189 of the Companies Act 2013 are primafacie not prejudicial to the interests of the Company.
(c) As per the information and explanations given to us these loans do not carry anyspecific repayment schedule and accordingly do not warrant any comments under Clauses 3(iii) (b) of the Order for the current year.
(d) As per the information and explanations given to us as these loan do not carry anyspecific repayment schedule and consequently does not warrant any comments under Clause3(iii)(c ) relating to Overdues.
4) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Companies Act 2013in respect of loans investments guarantees and security.
5) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2016 withregard to the deposits accepted from the public are not applicable.
6) The maintenance of Cost Records has not been specified by the Central Governmentunder sub-section (1) of Section 148 of the Act in respect of the activities carried onby the company.
7) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company there are no dues in respect of amountsdeducted/ accrued in the books of account in respect of undisputed statutory duesincluding Provident Fund Income Tax Sales Tax Wealth Tax Service Tax duty of CustomsValue Added Tax and Cess with the appropriate authorities during the year and othermaterial statutory dues applicable to the Company and in respect of this dues there areno outstanding dues as on 31.03.2017 which are outstanding more than six months from thedate they became payable.
(b) According to the information and explanations given to us there are no dues ofwealth tax duty of customs and cess which have not been deposited with the appropriateauthorities on account of any dispute except as stated hereunder:-i. Appeal pendingbefore Income Tax Appellate Tribunal for the AY 2009-10 2010-11 & 2011-12 involvingTax Amounts of Rs.2828435/- Rs. 7545571/- & Rs. 10415056/- respectively.
ii. Appeal pending before Income Tax Appellate Tribunal for the AY 2012-13 involvingTax amount of Rs. 14539953/-.
iii. Appeal pending before Hon'ble Dispute Resolution Panel Bangalore for AY 2013-14involving tax amount of Rs. 26494839/- & for AY 2014-15 involving tax amount of Rs.20199151/- on account of disallowance of losses.
iv. Service Tax demand amounting to Rs. 8519526/- for the years 2010-12 2012-13& 2013-14 on the Company on account of the E-Procurement contract executed inBangladesh for the Bangladesh government treating as Import of Business SupportServices' against which Company filed appeal before CESTAT Bangalore.
8) In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to banks Government. The Company hasnot issued any debentures.
9) Based upon the information and explanations given by the management the company hasnot raised moneys by way of initial public offer or further public offer including debtinstruments and term Loans.
10) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
11) Based upon the audit procedures performed and the information and explanationsgiven by the management no managerial remuneration was paid or provided. Accordingly theprovisions of clause 3 (XI) of the order are not applicable to the company during thecurrent year.
12) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.
13) In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.
14) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview.
15) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with them. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon.
16) In our opinion the company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934.
For and on behalf of
Sarath & Associates
Firm's registration number: 005120S
P. Sarath Kumar
Place: Hyderabad Partner Date: 29.05.2017 M.No.:021755
Annexure B to the Independent Auditor's Report of even date on theFinancial Statements of GSS INFOTECH LIMITED
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 reporting of GSSINFOTECH LIMITED as of March 31 2017 in conjunction with our audit of the financialstatements 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. These responsibilities includethe design implementation and maintenance of adequate Internal Financial Controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
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 Reportingand the Standards on Auditing issued by ICAI and deemed to be prescribed under section143(10) of the Companies Act 2013 to the extent applicable to an audit of InternalFinancial Controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate Internal Financial Controlsover financial reporting was established and maintained and if such controls operatedeffectively 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 judgement 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.
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 31 2017 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 and on behalf of
Sarath & Associates
Firm's registration number: 005120S
P. Sarath Kumar
Place: Hyderabad Partner Date: 29.05.2017 M.No:021755