the members of
CRANES SOFTWARE INTERNATIONAL LIMITED
Report on the Audit of the Standalone Ind AS Financial Statements Qualified
We have audited the accompanying standalone financial statements of Cranes SoftwareInternational Limited("the Company") which comprise of Balance sheet as at March312021 and Statement of Profit and loss (including other Comprehensive income) the cashflow statement and the statement of changes in equity for the year then ended and asummary of significant accounting policies and other explanatory information
In our opinion and to the best of the information and according to the explanationgiven to us except to the matters expressed in the Basis of Qualified Opinion andEmphasis of Matter Paragraph the statement gives the information required by theCompanies Act 2013 ("the Act") in a manner so required and give a true and fairview in conformity with Indian accounting standards prescribed under section 133 of theAct read with the Companies (Indian Accounting Standards) Rule 2015 as amended ("IndAS") and other accounting principles generally accepted in India of the state ofaffairs of the Company as at March 312021 and its loss (Including Comprehensiveincome) its cash flows and changes in equity for the year ended on that date.
Basis for Qualified Opinion
We conducted our audit in accordance with the Standards of Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under these standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the company in accordance with theCode of Ethics issued by the institute of Chartered Accountants of India ("TheICAI") together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the rules there underand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence obtained by us issufficient and appropriate to provide a basis for our audit opinion on the standalonefinancial statements
1. The attached Balance Sheet as at 31st March 2021 is drawn on the basisof the Principle of Going Concern'.
We opine as follows in this connection:
i. Attention of the members is invited to note 6 of the Financial Statements regardingrecognition of deferred tax credit on account of unabsorbed losses and allowancesaggregating to INR 24585.77 lakhs (year ended March 312020 INR 22032.78 lakhs). Thisdoes not satisfy the virtual certainty test for recognition of deferred tax credit as laiddown in IND AS-12.
ii. The appropriateness of the Going Concern' concept based on which the accountshave been prepared is interalia dependent on the Company's ability to infuse requisitefunds for meeting its obligations rescheduling of debt and resuming normal operations.
We further report that had the observation made in paragraph 1 (i) above beenconsidered the loss after tax for the year ended March 312021 would have been higher byINR. 24585.77 lakhs.
2. We draw attention to Note No. 34 of the standalone Ind AS Financial Statementsregarding the Redemption of Foreign currency convertible bonds.
i. Redemption of Foreign currency convertible bond amounting to INR. 29085 lakhs (42million Euros) to the holders of the bonds have fallen due during April 2011 and is yet tobe redeemed as on the date of Balance Sheet. On a petition filed by the Foreign currencyconvertible bond holders The Hon'ble High Court of Karnataka issued a winding up orderagainst the company which indicates the existence of material uncertainty that may castsignificant doubt on the company's ability to continue as a going concern.
ii. The Company had received an intimation from the "Ministry of Corporateaffairs" during August 2019 stating that a wounding up order is issued against theCompany by the Hon'ble High Court of Karnataka vide order dated 28th November 2017.Further based on the plea submitted by the Company the Hon'ble High Court of Karnatakahad granted a stay during December 2020 directing the official liquidator not toprecipitate the process of the winding up order and the matter is extended till the nextdate of hearing as the petitioner and the company are exploring the possibility ofamicable settlement.
However the accounts have been prepared on a going concern basis.
Emphasis of Matter
a. Term loans and working capital loans availed by the company from various banksamounting to INR 57736.13 lakhs remain unpaid and are overdue since 2009 remain unpaidand are overdue since 2009. The lenders have filed cases before the Debt Recovery Tribunal (DRT) / Hon'ble Courts etc for recovery of dues. These proceedings are in variousstages of disposal before the "DRT" and the respective Hon'ble Courts. Windingup petition has been filed by Bank of India against the company before the Hon'ble HighCourt of Karnataka for non-payment of principal and the accrued interest thereon
b. Legal proceedings u/s.138 of the Negotiable Instruments Act has been initiated bythe following Banks against the company.
i. Industrial Development Bank of India
ii. State Bank of India (Formerly State Bank of Mysore)
iii. Bank of India
c. In our opinion the securities provided to Banks are not adequate to cover theamounts outstanding to them as on the date of Balance Sheet.
d. We would like to draw the attention of the members to note no. 9 of the financialstatements regarding the squaring off of the allowance for credit loss against therespective receivables.
e. We would like to draw the attention of the members to note no. 27 of the financialstatements regarding default of payments to various statutory authorities.
f. We draw attention to Note No. 35 of the standalone Ind AS Financial Statementsregarding the investments (including receivables) made in wholly owned subsidiaries. Asexplained by the management it being a long term and strategic investment there is areasonable certainty that there will be no diminution in the value of the investment andis confident of recovery of receivables.Except for the provision for doubtful debts of INR1463.00 lakhs provided during the year towards due from a subsidiary no otherprovisioning has been considered necessary. The details of investments (includingreceivables) in subsidiaries are as under.
(Rs in Lakhs)
|Sl No. Name of the Subsidiary ||Amount |
|1 Esqube Communication Solutions Pvt. Ltd. ||190.92 |
|2 Cranes Software International Pte Limited ||1715.05 |
|3 Systat Software UK Ltd ||433.95 |
|4 Proland Software Private Limited ||463.34 |
|5 Systat Software Inc.(Net of Provision) ||9604.48 |
|6 Tilak Auto Tech Private Ltd. ||163.81 |
|7 Cranes Varsity P rivate Ltd. ||49.52 |
|8 Systat Software Gmbh ||187.67 |
|Total ||12808.24 |
g. The company had invested in the below mentioned wholly owned subsidiaries. Due tothe cumulative losses in the subsidiaries the value of investment is eroded.
(Rs in Lakhs)
|Sl No. Name of the Subsidiary ||Investment ||Shareholder Funds |
|1 Esqube Communication Solutions Pvt. Ltd. ||179.78 ||(24.39) |
|2 Proland Software Pvt. Ltd. ||318.89 ||(645.49) |
|3 Tilak Auto Tech Private Limited ||51.62 ||(144.56) |
|4 Systat Software Inc. USA ||1851.18 ||(4242.24) |
|5 Cranes Software International Pte Limited ||44.31 ||(575.23) |
|6 Caravel Info System Private Limited ||362.33 ||(546.56) |
|TOTAL ||2808.11 ||(6178.47) |
h. The company has not provided for diminution / impairment in the value of itsinvestments in the above wholly owned subsidiaries as required by the IND AS-36.
i. The Company has drawn and utilized an amount INR 43.78 lakhs from the CSILEmployees Comprehensive Gratuity Trust' fund for the purpose not intended in terms ofThe Payment of Gratuity Act 1972.(See note No. 15 of the Financial Statements)
j. Loan availed by the company from UPS Capital Business Credit' remains unpaidand is overdue since April 2014. The management is of the view that the liability of INR696.37 lakhs (including interest) reflected in the financial statements will adequatelycover its liability on settlement of dues and therefore no provision for interest isprovided for the year ended 31st March 2021. Had such interest been provided in the booksin the normal course the present loss for the year ended 31st March 2021 would have beenhigher by INR 178.91 lakhs.
k. In continuation to the point j' above the company has also discontinued therestatement of the Exchange fluctuation gain / loss on account of the outstanding duetowards UPS Capital Business Credit' and the interest due thereon in line with theInd AS-21 "The Effects of Changes in Foreign Exchange Rates". Had suchrestatement of liability been made in the books in the normal course the present loss forthe year ended 31st March 2021 would have been lower by INR 19.63 lakhs.
l. The banks which had extended financial facilities to the company have treated theoutstanding from the company as "Non-Performing Assets" since 2009. In order toachieve the desired congruency on this issue the Company has also not provided forinterest amounting to INR 11286.71 lakhs on such outstanding amounts for the year ended31st March 2021 due to various banks though the confirmation of such dues were not madeavailable to us from the respective banks/financial institutions. Had the said interestbeen provided in the books in the normal course the present loss for the year ended 31stMarch 2021 would have been higher by INR 11286.71lakhs.
m. The management is in negotiation with the Foreign currency convertible bond holdersfor settling its dues. The management is of the view that the liability of INR 38695lakhs (including interest amounting to INR 9610 lakhs) reflected in the financialstatements will adequately cover its liability on settlement of dues with the Foreigncurrency convertible bond holders and therefore no provision for interest is provided forthe year ended 31st March 2021. Had such interest been provided in the books in the normalcourse the present loss for the year ended 31st March 2021 would have been higher by INR1738.04 lakhs.
n. In continuation to the point m' above the company has also discontinued therestatement of the Exchange fluctuation gain / loss on account of the outstanding duetowards Foreign currency convertible bond and the interest due thereon in line with theIND AS-21 "The Effects of Changes in Foreign Exchange Rates". Had suchrestatement of liability been made in the books in the normal course the present loss forthe year ended 31st March 2021 would have been higher by INR 1243.20 lakhs.
o. There are undisputed statutory dues including dues on current year's transactionson account of Provident Fund Contribution Employee State Insurance Income Tax Servicetax Sales Tax Goods and Service tax Dividend Distribution Tax and the like notdeposited by the Company in favor of the respective statutory authorities.
p. The management is of the opinion that the all assets investments have at least thevalue as stated in the Balance Sheet if realized in the ordinary course of business.
Our Report is not qualified in respect of the above matter.
3. Key audit matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
We have determined the matter described below to be the key audit matter to becommunicated in our report
|Key Audit Matters ||How our audit addressed the key audit matters |
|(a) Adoption of Ind AS 115- Revenue from contracts with customers: ||Our responses: |
|As described in note number 2B to the financial statements the company has adopted Ind AS 115 Revenue from Contracts with Customers which is the new accounting standard. Considering the nature of the industry where revenue is recognized on basis the terms of each contract with customers these commercial arrangements can be complex and significant judgments relating to identification of distinct performance obligations determination of transaction price of identified performance obligation and the appropriateness of basis used to measure revenue recognized over the time period is applied in selecting the accounting basis in each case. Additionally new revenue accounting standard contains disclosures which involves disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. ||We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard. |
| ||Our audit procedures to address the risk of material misstatement relating to revenue recognition includes testing of design and operating effectiveness of controls and substantive procedures as follows: |
| || Evaluated the design and operating effectiveness of internal controls relating to the implementation of new revenu e standard; |
| || Evaluated detailed analysis performed by the management on each stream of revenue contracts. |
| || Selected samples from all streams of contracts to carry out a detailed analysis on recognition of revenue as per the five steps given in standard. Performed revenue transaction testing on samples selected from each stream of revenue where each input to revenue recognition including estimates |
|(b) Assessment of the appropriateness of provisions recognized and contingent liabilities disclosed in respect of certain tax matters ||Our audit procedures included the following: |
|(Refer notes 27 of the standalone Ind AS financial statements and Annexure A of the Audit Report) As at March 31 2021 the Company has significant tax exposures and is subject to periodic assessments/ challenges by tax authorities on transfer pricing income tax and a range of indirect tax matters.Consequent to such tax assessments and demands relating to past several years the Company has paid certain amounts under protest at various dates. The Company has also filed appeals with various appellate authorities against such demands.Management judgement is involved in assessing the likelihood of ultimate outcome of the tax disputes to decide on the accounting/ disclosure requirements. In certain complex matters the probable amount of the outflows determined by management is supported by opinions obtained from external tax counsels/ experts (management tax experts). || Understood assessed and tested the design and operating effectiveness of the Company's controls in respect of identifying potential tax exposures and/or the accounting and disclosures thereof. |
| || Evaluated the related accounting policy for provisioning for tax exposures/ disclosure of contingent liabilities. |
| || Obtained management's assessment in respect of tax demands on whether tax outflow is either probable possible or remote. |
| || Along with the auditors' experts where necessary evaluated the management's assessment as follows: |
| ||- Read the correspondences received during the year from the tax authorities. |
| ||- Read views provided by the management management tax experts as applicable. |
| ||- Assessed management's positions on significant tax exposures for reasonableness. |
|We considered this a key audit matter as: ||- Ensured completeness of litigations by inquiring with the management review of board minutes and review of significant legal expenses. |
| The amounts involved are significant to the standalone Ind AS financial statements || |
| Change in the management's judgements and estimates may significantly affect the provisions recognized or contingent liabilities disclosed ||- Evaluated the objectivity competence and capabilities of the management tax experts |
| Matters of disputes are complex in some cases due to the industry in which the Company operates and may lack clarity under tax laws. ||- Evaluated the adequacy of disclosures made in the standalone Ind AS financial statements. |
| ||Based on the above procedures we considered the management's assessment in recognizing provisions and disclosing contingent liabilities in respect of the stated tax matters as reasonable. |
Information Other than the Standalone Ind AS financial statements and Auditor's Reportthereon
The Company's Board of Directors are responsible for the preparation of the otherinformation. The other information comprises the information included in the Board'sReport including Annexures to Board's Report Business Responsibility Report but does notinclude the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the accompanying 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 Ind AS financial statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless Managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process Auditor's Responsibility on the accompanying Financial Statements
Our objective is to obtain reasonable assurance about whether the financial statementsas a whole are free from material misstatement whether due to fraud or error and toissue 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 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 financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 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 reasonableness ofaccounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 financial statements or if such disclosures are inadequate to modify our opinion.our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
S Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or aggregate makes it probable that the economic decisions of areasonably knowledgeable user of standalone financial statement may be influenced. Weconsider quantitative materiality and quantitative factors in (i) planning the scope ofaudit work and evaluating the results thereof; and (ii) to evaluate the effect of anyidentified misstatements in standalone 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 thecurrent period and are therefore the key audit matters. We describethese matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremelyrare circumstances we determine that a matter should notbecommunicated in our report because the adverse consequencesof doing so would reasonablybe expected to outweigh the publicinterest benefits of such communication.
ReportonOther LegalandRegulatory 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 ofthe Act we give in the Annexure A a statement on the matters specified in paragraphs 3and 4 of the order to the extent applicable.
Asrequired by Section143 (3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of accounts as required by law have been kept by theCompany so far as it appears from our examination of those books;
(c) The standalone Balance Sheet the standalone Statement of Profit and Loss thestandalone Cash Flow Statement and the statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.
(d) In our opinion except for the matters expressed in para's 1 and 2 of the Basis forQualified opinion theafore said standalone Ind AS Financial Statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule7of theCompanies (Accounts) Rules 2014.
(e) In our opinion the qualifications and the Emphasis of Matter"paragraph may have an adverse effect on the functioning of the Company.
(f) Three out of four Directors of the company being directors of other companies whichhave not filed its annual return with the Registrar of Companies for a period of more than3 years as on the date of Balance Sheet leading to non-compliance and disqualificationfrom being appointed as a director. The Registrar of the Companies Karnataka had orderedfor removal of directors in terms of Section 164(2) of the Companies Act 2013. The saiddirectors have obtained an interim stay from the Hon'ble High Court of Karnatakaon 26thof October 2018. However in case of the remaining director on the basis of the writtenrepresentations received as on 31st March 2021 taken on record by the Board of Directorsthe director is not disqualified as on 31st March2021 from being appointed asa director in terms of Section 164(2) of the Act.
(g) 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 B";
(h) Due to pandemic COVID-19 we have not been able to visit the business areas forperforming verification of documents and other records relevant for the audit. However wehave sought documents and records via electronic mode and the same was made availablethough not in complete for our verification.
(i) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note No. 27 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. The Company has not transferred an amount of INR 7.21 Lakhs which is required tobe transferred to the Investor Education and Protection Fund.
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT
The Annexure referred to in our Independent Auditor's report to the members of CranesSoftware InternationalLimited (the Company') on the standalone Ind AS financialstatements for the year ended on 31st March 2021.
We report that:
i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of the immovable properties areheld in the name of the Company.
ii) In our opinion and according to the information and explanations given to us themanagement has conducted the physical verification of inventory at reasonable intervalsduring the year under review and no material discrepancies were noticed on such physicalverification.
iii) The Company has in the past granted interest free loans to its subsidiarycompanies covered in the register maintained under section 189 of the Companies Act 2013.However the Company has not granted any loan secured or unsecured to firms or otherparties covered in the register maintained under section 189 of the Companies Act 2013.
(a) The terms and conditions of the grant of such loans are not prejudicial to thecompany's interest.
(b) In the case of the loans granted to the bodies corporate listed in the registermaintained under section 189 of the Act the terms of arrangements do not stipulate anyrepayment schedule and the loans are repayable on demand. Accordingly paragraph 3(iii)(b)of the Order is not applicable to the Company in respect of repayment of the principalamount.
(c) There are no overdue amounts of more than ninety days in respect of the loansgranted to the bodies corporate listed in the register maintained under section 189 of theAct.
iv) 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 Act with respectto the loan and investments made.
x) The Company has not raised any deposits from public as covered by provisions ofSections 73 to 76 or any other relevant provisions of the Companies Act and the rulesframed thereunder.
vi) The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the services rendered by the Company.
vii) (a) On Examination of the books of accounts and other records of the Company wereport that the company has defaulted in depositing its undisputed statutory duesincluding Provident Fund Investors Education and Protection Fund Employees' stateInsurance Income Tax Sales Tax Service Tax Wealth Tax Customs duty goods and servicetax and Cess with the appropriate authorities. The following statutory liabilities arepending for payment for a period of more than six months from the date they becamepayable:
(Rs. In Lakhs)
|Name of the Statute ||Nature of dues ||Amount to be paid |
|Employee's Provident Fund & Miscellaneous Provision Act ||Provident Fund ||19.89 |
|Commercial Taxes Act ||Professional Tax ||0.40 |
|Employees State Insurance Act ||ESI ||9.72 |
|Income Tax Act ||Withholding Taxes ||308.28 |
|Service Tax ||Service Tax ||239.48 |
|Commercial Taxes Act ||Sales-Tax / Value Added Tax ||69.54 |
|Goods & Service Tax ||Goods & Service Tax ||154.38 |
|Income Tax Act ||Self Assessment Tax ||221.36 |
|Wealth Tax Act ||Wealth Tax ||0.45 |
|Income Tax Act ||Dividend Distribution Tax ||273.88 |
|Investor Education Protection Fund ||Unclaimed Dividend ||7.21 |
(b) According to the information and explanations given to us there are no disputedamounts as at 31st March 2021 in respect of Provident Fund Employees' stateInsurance Income Tax Sales Tax Service Tax Goods and Service Tax Wealth Tax Customsduty and Cess and other applicable statutory dues with the exception of the following:
(Rs. In Lakhs)
|Name of the statute ||Nature of dues ||Amount ||Period to which amount relates ||Forum where dispute is pending |
|Chapter V of the Finance Act 1994 ||Service Tax ||756.02 ||2004-05 to 2007-08 ||Customs Excise and Service Tax Appellate Tribunal |
|Chapter V of the Finance Act 1994 ||ServiceTax ||1261.00 ||2008-09 to 2012-13 ||Commissioner Service Tax Bangalore |
|The Employees Provident Fund and Miscellaneous Provisions Act 1972 ||Employer and Employee Provident Fund ||83.09 ||1996-1997 to 2014-15 ||Assistant / Regional Provident Fund Commissioner |
|The Foreign Exchange Regulation Act 1999 ||Penalty for contravention of section 42(1) of the FEMA 1999 ||580.00 ||2006 ||Director Directorate of Enforcement. |
viii) There are defaults in repayment of dues to various financial institutions andbanks as at the balance sheet date. The amount of defaults and the period are tabulatedbelow
(Rs. In Lakhs)
|Name of the Banks & financial institutions ||Amount of default (including accrued interest) ||Period of Default |
|Bank of India ||39006.21 ||From 2009 to Till Date |
|Industrial Development Bank of India ||6281.23 ||From 2009 to Till Date |
|State Bank of India (Formerly State Bank of Mysore) ||5429.96 ||From 2009 to Till Date |
|State Bank of India (Formerly State Bank of Travancore) ||7018.61 ||From 2009 to Till Date |
ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.
x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. .
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 reporting of CranesSoftware International Limited ("the Company") as of 31 March 2021 inconjunction with our audit of the financial statements of the Company for the year endedon 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 (ICAI'). 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 company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the 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 Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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 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
Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
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 authorizations of management and directors of the company; and
Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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 subject to the qualifications and the matters specified in theEmphasis of Matter' paragraph as appearing in our Independent Auditor's Report ofeven date the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31 March 2021 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For SethiaPrabhad Hegde & Co Chartered Acco untants |
| ||Registration No.013367S |
|August 112021 ||Timmayya Hegde Partner |
|Bengaluru ||Membership No.226267 |
| ||UDIN : 21226267AAAABP3582 |