You are here » Home » Companies » Company Overview » Cigniti Technologies Ltd

Cigniti Technologies Ltd.

BSE: 534758 Sector: IT
NSE: CIGNITITEC ISIN Code: INE675C01017
BSE 00:00 | 16 Jul 259.75 0.55
(0.21%)
OPEN

266.65

HIGH

266.65

LOW

258.00

NSE 00:00 | 16 Jul 259.45 0.35
(0.14%)
OPEN

266.20

HIGH

266.20

LOW

258.00

OPEN 266.65
PREVIOUS CLOSE 259.20
VOLUME 574
52-Week high 349.65
52-Week low 175.10
P/E 12.13
Mkt Cap.(Rs cr) 723
Buy Price 258.00
Buy Qty 100.00
Sell Price 261.50
Sell Qty 1.00
OPEN 266.65
CLOSE 259.20
VOLUME 574
52-Week high 349.65
52-Week low 175.10
P/E 12.13
Mkt Cap.(Rs cr) 723
Buy Price 258.00
Buy Qty 100.00
Sell Price 261.50
Sell Qty 1.00

Cigniti Technologies Ltd. (CIGNITITEC) - Auditors Report

Company auditors report

To the Members of Cigniti Technologies Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying Standalone Financial Statements ofCigniti Technologies Limited (the "Company") which comprise the Balance Sheetas at March 31 2019 the Statement of Profit and Loss including the Statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas the "Standalone Financial Statements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Standalone Financial Statements give theinformation required by the Companies Act 2013 (the "Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019its profit including other comprehensive income its cash flows and the changes in equityfor the year ended on that date.

Basis for Opinion

We conducted our audit of the Standalone Financial Statements inaccordance with the Standards on Auditing (SAs) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the‘Auditor's Responsibilities for the Audit of the Standalone FinancialStatements' section of our report. We are independent of the Company in accordancewith the ‘Code of Ethics' issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Standalone FinancialStatements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Standalone Financial Statements for thefinancial year ended March 31 2019. These matters were addressed in the context of ouraudit of the Standalone Financial Statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. For each matter belowour description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the Standalone FinancialStatements section of our report including in relation to these matters. Accordingly ouraudit included the performance of procedures designed to respond to our assessment of therisks of material misstatement of the Standalone Financial Statements. The results of ouraudit procedures including the procedures performed to address the matters below providethe basis for our audit opinion on the accompanying Standalone Financial Statements.

Key audit matters How our audit addressed the key audit matter
Impairment assessment of investment in subsidiary (as described in note 4 of the Standalone Financial Statements)
As at March 31 2019 the Company has investment Our audit procedures included the following: of Rs. 5549.49 lakhs in Cigniti Technologies Inc.
The determination of recoverable amounts of the Company's investments in the subsidiary relies on management's estimates of forecast of future cash flows and their judgment with respect to the forecast of the subsidiary's future performance. • Assessing the design implementation and operative effectiveness of management's key internal controls over investment impairment assessment;
• We assessed the methodology applied by the Company in its impairment analysis. In making this assessment we also evaluated the competence professional qualification objectivity and independence of Company's specialists involved in the process;
The carrying amount of the investment is tested annually for impairment using discounted cash-flow models of subsidiary's recoverable value compared to the carrying value. A deficit between the recoverable value and the carrying value of investment would result in impairment. The inputs to the impairment testing model which have the most significant impact on recoverable value include: • With the assistance of a specialist we assessed the assumptions around the key drivers of the cash flow forecasts including discount rates expected growth rates and terminal growth rates used; We also assessed the recoverable value headroom by performing sensitivity testing of key assumptions used;
- Projected revenue growth operating margins and • operating cash-flows in the years 1-5;
- Stable long-term growth rates beyond five years and in perpetuity; and • We discussed potential changes in key drivers as compared to previous year/ actual performance with management in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable;
- Discount rates that represent the current market assessment of the risks specific to the subsidiary taking into consideration the time value of money.
The impairment test model includes sensitivity testing of key assumptions including revenue growth operating margin and discount rate. • We tested the arithmetical accuracy of the models; and
The impairment testing is considered a significant accounting judgement and estimate and a key audit matter because the assumptions on which the tests are based are highly judgmental and are affected by future market and economic conditions which are inherently uncertain and because of the materiality of the balance to the financial statements as a whole. • We assessed the related disclosures as described in note 4 to the Standalone Financial Statements.
Income taxes – Current and Deferred Tax (as described in note 29 of the Standalone Financial Statements) With the assistance of a tax specialist our procedures included but were not limited to:
Estimates with respect to the valuation of deferred tax asset
The Company has unrecognised deferred tax assets primarily relating to tax losses available for utilization in future periods as disclosed in note 29 to the Standalone • Assessing the design implementation and operative effectiveness of management's key internal controls over income tax including deferred tax recognition;
Financial Statements. There is inherent uncertainty involved in forecasting future taxable profits which determines the extent to which deferred tax assets are or are not recognised. There are cross-border transactions also which give rise to transfer pricing related risks that require significant judgements by management to adequately determine the appropriate tax charge and any associated provisions. Changes in the company's business its operating structure its investments and regulations may impact these projections. We deemed this subject to be a key audit matter because the assessment process of recognition and recoverability of the deferred tax assets is complex and judgmental and is based on assumptions that are affected by expected future market or economic conditions.
• Evaluating the management's assumptions and estimates like projected revenue growth EBIDTA etc. in relation to the probability of generating future taxable income to support the recognition of deferred income tax asset with reference to forecast taxable income;
• Assessing the historical accuracy of management's estimation of forecast taxable income; assessing the extent to which projected profits were taxable in particular the Company's assumptions about how accumulated tax losses and other associated tax attributes can be utilized against taxable profits;
• Involving transfer pricing specialists to consider the Company's assessment of its exposure to transfer pricing related risks and related corporate tax provisions; and
• Assessing the related disclosures in respect of the assumptions supporting the deferred tax asset valuation and recognition as described in note 29 to the Standalone Financial Statements.

Other Information

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the board's reports included in theannual report but does not include the Standalone Financial Statements and ourauditor's report thereon.

Our opinion on the Standalone Financial Statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these StandaloneFinancial Statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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; andthe design implementation and maintenance of adequate internal financial controls thatwere operating 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 isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Those Charged with Governance are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether theStandalone Financial Statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Standalone Financial Statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of theStandalone Financial Statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of theStandalone Financial Statements including the disclosures and whether the StandaloneFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the StandaloneFinancial Statements for the financial year ended March 31 2019 and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. 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 of the Act we give in the "Annexure 1" a statement on thematters 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 sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.;

(c) The Balance Sheet the Statement of Profit and Loss including theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid Standalone Financial Statementscomply with the Accounting Standards specified under Section 133 of the Act read withCompanies (Indian Accounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from thedirectors as on March 31 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2019 from being appointed as a director in termsof Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company with reference to these Standalone FinancialStatements and the operating effectiveness of such controls refer to our separate Reportin "Annexure 2" to this report;

(g) In our opinion the managerial remuneration for the year endedMarch 31 2019 has been paid / provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V to the Act;

(h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and according tothe explanations given to us:

i. The Company does not have any pending litigations which would impactits financial position;

i. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;

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

For S.R. BATLIBOI & ASSOCIATES LLP

Chartered Accountants ICAI Firm registration number: 101049W/E300004

per Shankar Srinivasan

Partner Membership No.: 213271

Place: Hyderabad Date: May 2 2019

Annexure 1 to the Independent Auditors' Report of even date on theStandalone Financial Statements of Cigniti Technologies Limited

Re: Cigniti Technologies Limited (‘the Company')

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant andequipment.

(b) Property plant and equipment have been physically verified by themanagement during the year and no material discrepancies were identified on suchverification.

(c) According to the information and explanations given by themanagement the title deeds of immovable properties included in property plant andequipment are held in the name of the Company.

(ii) The Company's business does not involve inventories andaccordingly the requirements under paragraph 3(ii) of the Order are not applicable to theCompany and hence not commented upon.

(iii) (a) The Company has granted an unsecured loan to a Companycovered in the register maintained under section 189 of the Companies Act 2013. In ouropinion and according to the information and explanations given to us the terms andconditions of the grant of such loans are not prejudicial to the company's interest.

(b) The Company has granted loan that is re-payable on demand to aCompany covered in the register maintained under section 189 of the Companies Act 2013.The loan has been fully repaid during the year along with interest and there has been nodefault on the part of the parties to whom the money has been lent.

(c) There are no amounts of loans granted to companies firms or otherparties listed in the register maintained under section 189 of the Companies Act 2013which are overdue for more than ninety days.

(iv) In our opinion and according to the information and explanationsgiven to us the Company has not advanced loans to directors / to a company in which theDirectors are interested to which provisions of section 185 of the Companies Act 2013apply. Provisions of section 186 of the Companies Act 2013 in respect of loans andadvances given investments guarantee and securities given have been complied with by theCompany.

(v) The Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable andhence not commented upon.

(vi) To the best of our knowledge and as explained the CentralGovernment has not specified the maintenance of cost records under Section 148(1) of theCompanies Act 2013 for the services of the Company and hence not commented upon.

(vii) (a) Undisputed statutory dues including provident fundemployees' state insurance income-tax goods and service tax and other statutorydues have generally been regularly deposited with the appropriate authorities though therehas been a slight delay in a few cases. The provisions relating to sales tax duty ofcustom duty of excise and cess are not applicable to the Company.

(b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome-tax goods and service tax and other statutory dues were outstanding at the yearend for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us thereare no dues of income tax goods and service tax and cess which have not been deposited onaccount of any dispute.

(viii)In our opinion and according to the information and explanationsgiven by the management the Company has not defaulted in repayment of loans or borrowingto a financial institution or bank. The Company did not have any dues to government ordebenture holders during the year.

(ix) In our opinion and according to the information and explanationsgiven by the management the Company has utilized the monies raised by way of term loansfor the purposes for which they were raised. The Company has not raised any money by wayof initial public offer / further public offer / debt instruments during the year.

(x) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management we report that no fraud by theCompany or no fraud on the Company by the officers and employees of the Company has beennoticed or reported during the year.

(xi) According to the information and explanations given by themanagement the managerial remuneration has been paid / provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act 2013.

(xii) In our opinion the Company is not a Nidhi Company. Thereforethe provisions of clause 3(xii) of the order are not applicable to the Company and hencenot commented upon.

(xiii)According to the information and explanations given by themanagement transactions with the related parties are in compliance with section 177 and188 of Companies Act 2013 where applicable and the details have been disclosed in thenotes to the financial statements as required by the applicable accounting standards.

(xiv)According to the information and explanations given to us and onan overall examination of the balance sheet the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and hence reporting requirements under clause 3(xiv) are notapplicable to the Company and hence not commented upon.

(xv)According to the information and explanations given by themanagement the Company has not entered into any non-cash transactions with directors orpersons connected with him as referred to in section 192 of Companies Act 2013.

(xvi)According to the information and explanations given to us theprovisions of section 45IA of the Reserve Bank of India Act 1934 are not applicable tothe Company and hence not commented upon.

For S.R. BATLIBOI & ASSOCIATES LLP

Chartered Accountants ICAI Firm registration number: 101049W/E300004

per Shankar Srinivasan

Partner Membership No.: 213271

Place: Hyderabad Date: May 2 2019

Annexure 2 to the Independent auditor's report of even date on theStandalone Financial Statements of Cigniti Technologies Limited

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financialreporting of Cigniti Technologies Limited ("the Company") as of March 31 2019in conjunction with our audit of the Standalone Financial Statements of the Company forthe year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting 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 the 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.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting with reference to these standalonefinancial statements based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting with reference to these standalone financialstatements was established and maintained and if such controls operated effectively in allmaterial respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls over financial reporting with reference tothese standalone financial statements and their operating effectiveness. Our audit ofinternal financial controls over financial reporting included obtaining an understandingof internal financial controls over financial reporting with reference to these standalonefinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlsover financial reporting with reference to these standalone financial statements.

Meaning of Internal Financial Controls Over Financial Reporting withreference to these standalone financial statements

A company's internal financial control over financial reportingwith reference to these standalone financial statements is a process designed to providereasonable assurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control over financialreporting with reference to these standalone financial statements includes those policiesand procedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a materialeffect on the financial statements.

Inherent Limitations of Internal Financial Controls Over FinancialReporting with reference to these standalone financial statements

Because of the inherent limitations of internal financial controls overfinancial reporting with reference to these standalone financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone financial statements to future periods are subject to the risk thatthe internal financial control over financial reporting with reference to these standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls over financial reporting with reference to these standalonefinancial statements and such internal financial controls over financial reporting withreference to these standalone financial statements were operating effectively as at March31 2019 based on the internal control over financial reporting criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India.

For S.R. BATLIBOI & ASSOCIATES LLP

Chartered Accountants ICAI Firm registration number: 101049W/E300004

per Shankar Srinivasan

Partner Membership No.: 213271

Place: Hyderabad Date: May 2 2019