The Members of M/s ADROIT INFOTECH LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of M/s Adroit InfotechLimited ("the Company") which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the 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 Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements 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 we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
Key audit matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report
|Key Audit Matter |
|The Company inter alia engages in Fixed-price contracts wherein revenue is recognized using |
the percentage of completion computed as per the input method based on the Company's
Estimate of contract costs.
|The Company engages in Fixed price contracts including contracts with multiple performance |
obligations. Revenue recognition in such contracts involves judgments relating to
identification of distinct performance obligations determination of transaction price for such
performance obligations and the appropriateness of the basis used to measure revenue
recognised over a period.
|In case of Fixed price development contracts where performance obligations are satisfied over |
a period of time revenue is recognised using the percentage of completion method based on
management's estimate of contract efforts. The estimation of total efforts or costs involves
significant judgement and is assessed throughout the period of the contract to reflect any
changes based on the latest available information. These contracts may also involve
recognizing onerous obligations that require critical estimates to be made by the management
|In case of Fixed price maintenance contracts revenue is recognised either on a straight line |
basis or using the percentage of completion method or at an amount equal to sums billed to
customer depending on the most appropriate method that depicts the value of service
delivered to the customer.
|Further in some of the Fixed price contracts consideration may be payable to the customer. |
Determination of whether such consideration payable is for a distinct good or service or an
adjustment to the transaction price is also a matter of judgement.
Application of Revenue recognition accounting standard (Ind AS 115 Revenue from Contracts
with customers) is complex and involves a number of key judgments and eliminates mainly in
identifying performance obligations related transaction price and estimating the future cost-
to-completion of these contracts which is used to determine the percentage of completion of
the relevant performance obligation;
|These Contracts may involve onerous obligations which requires critical assessment of |
foreseeable losses to be made by the Company; and at the year end significant amount of
work in progress (Contract assets) related to these contracts are recognized on the balance
|Auditor's Response |
|Our audit procedures included: |
| Obtained an understanding of the systems processes and controls for evaluation of fixed price |
contracts to identify distinct performance obligations and recognition of revenue.
| Assessed the IT environment in which the business systems operate and tested system controls |
over computation of revenue recognised;
| Evaluated the design and operating effectiveness of internal controls including IT controls |
relating to recording of the contract value determining the transaction price allocation of
consideration to different performance obligations measurement of efforts incurred and
process around estimation of efforts required to complete the performance obligations and the
most appropriate method to recognise revenue.
| On selected sample of contracts we tested that the revenue recognised is in accordance with |
the revenue recognition accounting standard.
| We Tested the controls pertaining to allocation of resources and budgeting systems which |
prevent the unauthorized recording/changes to costs incurred and controls relating to the
estimation of contract costs required to complete the respective projects.;
| considered the terms of the contracts to determine the transaction price including adjustments |
for any sums payable to the customer;
| determined if the Company's evaluation of the method used for recognition of revenue is |
| tested the Company's calculation of efforts incurred estimation of contract efforts including |
estimation of onerous obligation through a retrospective review of efforts incurred with
| Assessed appropriateness of contract assets/ unbilled revenue on balance sheet date by |
evaluating underlying documentation.
| Tested aged contract assets to assess possible delays in achieving milestones which may |
require a change in estimated efforts to complete the remaining performance obligations.
| Evaluated management assessment of the impact on revenue recognition and consequential |
impact on the expected credit loss allowance and other areas of judgement including for
possible effects if any from the COVID-19 pandemic.
| Performed analytical procedures over revenue and receivable |
|2 Key Audit Matter |
|Credit losses refer notes to the financial statements |
|The Company determines the allowance for credit losses based on historical loss experience |
adjusted to reflect current and estimated future economic conditions. The Company
considered current and anticipated future economic conditions relating to industries the
Company deals with and the countries where it operates. In calculating expected credit losses
the Company also considered credit reports and other related credit information for its
customers to estimate the probability of default in future and has taken into account estimates
of possible effect from the pandemic relating to COVID-19.
|We identified allowance for credit losses as a critical audit matter because of the significant |
judgement involved in calculating the expected credit losses. This required a high degree of
auditor judgment and an increased extent of effort when performing audit procedures to
evaluate the reasonableness of management's estimate of the expected credit losses.
|Auditor's Response |
|Our audit procedures related to the allowance for credit losses for trade receivables unbilled |
receivables and contract assets included the following among others:
| We tested the effectiveness of controls over the (1) development of the methodology for the |
allowance for credit losses including consideration of the current and estimated future
economic conditions (2) completeness and accuracy of information used in the estimation of
probability of default and (3) computation of the allowance for credit losses
| For a sample of customers we tested the input data such as credit reports and other credit |
related information used in estimating the probability of default by comparing them to
external and internal sources of information.
| We evaluated the incorporation of the applicable assumptions into the estimate of expected |
credit losses and tested the mathematical accuracy and computation of the allowances by
using the same input data used by the Company.
| We evaluated the qualitative adjustment to the historical loss rates including assessing the |
basis for the adjustments and the reasonableness of the significant assumptions.
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other Information comprises the information included in the ManagementDiscussion and Analysis Board's Report Including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to report that fact. We havenothing to report in this regard.
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 Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. 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 standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors is responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal controls
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's However future events or conditions may cause the Company to cease to continueas a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
As required by Section 143(3) of the Act based on our audit we report that:
We have sought and obtained all the information and explanations which to the best ofour knowledge and belief were necessary for the purposes of our audit.
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.
The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.
On the basis of the written representations received from the directors as on March 312019 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct.
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 A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial
With respect to the other matters to be included in the Auditor's Report in accordancewith the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.
With respect to the other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended in our opinionand to the best of our information and according to the explanations given to us :
There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the company.
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theorder.
| ||For Niranjan & Narayan Chartered Accountants |
| ||Firm Registration Number:005899S |
| ||Sd./- |
| ||CA P Venumadhava Rao Partner |
|Place: Hyderabad ||Membership No. 202785 |
|Date: 08.06.2020 ||UDIN: 20202785AAAABH4596 |
Annexure "A" to the Independent Auditor's Report
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of M/s Adroit Infotech Limited of evendate
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of M/s. AdroitInfotech Limited ("the Company") as of March 31 2020 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting 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 respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. 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 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 internal financial controls system overfinancial reporting of the Company.
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.
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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
| || ||For Niranjan & Narayan |
| || ||Chartered Accountants |
| || ||Firm Registration No.005899S |
| || ||Sd./- |
| || ||P Venumadhava Rao |
| || ||Partner |
| || ||Membership No. 202785 |
| || ||UDIN: 20202785AAAABH4596 |
|Place: Hyderabad || |
|Date: ||08-06-2020 || |
Annexure B' to the Independent Auditor's Report
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of M/s. Adroit Infotech Limited of evendate)
I. In respect of the Company's fixed assets: a) The Company has maintained properrecords showing full particulars including quantitative details and situation of fixedassets. b) The Company has a program of verification to cover all the items of fixedassets in a phased manner which in our opinion is reasonable having regard to the sizeof the Company and the nature of its assets. Pursuant to the program certain fixed assetswere physically verified by the management during the year. According to the informationand explanations given to us no material discrepancies were noticed on such verification.c) According to the information and explanations given to us the records examined by usand based on the examination of the conveyance deeds / registered sale deed provided tous we report that the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the Company as at the balance sheetdate. In respect of immovable properties of land and building that have been taken onlease and disclosed as fixed assets in the standalone financial statements the leaseagreements are in the name of the Company.
II. The Company is in the business of providing software services and does not have anyphysical inventories.
Accordingly reporting under clause 3 (ii) of the Order is not applicable to theCompany.
III. According the information and explanations given to us the Company has grantedunsecured loans to anyone bodies corporate covered in the register maintained undersection 189 of the Companies Act 2013 in respect of which :
a) The terms and conditions of the grant of such loans are in our opinion primafacie not prejudicial to the Company's interest.
b) The schedule of repayment of principal and payment of interest has been stipulatedand repayments or receipts of principal amounts and interest have been regular as perstipulations c) There is no overdue amount remaining outstanding as at the year-end.
IV. In our opinion and according to the information and explanations given to us theCompany has not made any transaction in nature of loans investments guarantees andsecurity where provisions of Sections 185 and 186 of the Companies Act'2013 areapplicable this paragraph 3(iv) of the Order is not applicable to the Company.
V. The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at March
31 2020 and therefore the provisions of the clause 3 (v) of the Order are notapplicable to the Company.
VI. The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the
Companies Act 2013 for the business activities carried out by the Thus reporting underclause 3(vi) of the order is not applicable to the Company.
VII. According to the information and explanations given to us in respect of statutorydues :
a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Goods and Service TaxCustoms Duty Cess and other material statutory dues applicable to it with the appropriateauthorities. b) There were no undisputed amounts payable in respect of Provident FundEmployees' State Insurance Income Tax Goods and Service Tax Customs Duty cess andother material statutory dues in arrears as at March 31 2020 for a period of more thansix months from the date they became payable.
c) Details of dues of Income Tax Sales Tax Service Tax Excise Duty and Value AddedTax which have not been deposited as at March 31 2020 on account of dispute are givenbelow :
VIII. In our opinion and according to information and explanation given to us thecompany has not defaulted in payment of dues to Banks Financials Institutions as on dateof Balance Sheet.
IX. The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause 3 (ix)of the Order is not applicable to the Company.
X. To the best of our knowledge and according to the information and explanations givento us no fraud by the
Company or no material fraud on the Company by its officers or employees has beennoticed or reported during the year.
XI. In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
XII. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theOrder is not applicable to the Company.
XIII. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.
XIV. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3 (xiv) of the Order is not applicable to the Company.
XV. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and hence provisions of section 192 of theCompanies Act 2013 are not applicable to the Company.
XVI. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||For Niranjan & Narayan Chartered Accountants |
| ||Firm Registration Number:.005899S |
|Place: Hyderabad ||Sd./- |
|Date: 08-06-2020 ||P Venumadhava Rao |
| ||Partner |
| ||Membership No. 202785 |
| ||UDIN: 20202785AAAABH4596 |