You are here » Home » Companies » Company Overview » Educomp Solutions Ltd

Educomp Solutions Ltd.

BSE: 532696 Sector: Services
NSE: EDUCOMP ISIN Code: INE216H01027
BSE 00:00 | 17 Sep 2.93 -0.12
(-3.93%)
OPEN

3.00

HIGH

3.04

LOW

2.90

NSE 00:00 | 17 Sep 2.95 -0.05
(-1.67%)
OPEN

3.00

HIGH

3.05

LOW

2.85

OPEN 3.00
PREVIOUS CLOSE 3.05
VOLUME 42217
52-Week high 4.52
52-Week low 2.28
P/E
Mkt Cap.(Rs cr) 36
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 3.00
CLOSE 3.05
VOLUME 42217
52-Week high 4.52
52-Week low 2.28
P/E
Mkt Cap.(Rs cr) 36
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Educomp Solutions Ltd. (EDUCOMP) - Auditors Report

Company auditors report

To the Members of Educomp Solutions Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Educomp SolutionsLimited ("the Company") which comprise the Balance Sheet as at March 31 2016the Statement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.

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 Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting 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 and ensuring their operating effectiveness and the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone financial statements. The procedures selected depend on theauditors' judgment including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the standalone financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2016 its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to the following matter in the notes to the standalone financialstatements:

a) Note no. 32 regarding managerial remuneration paid to one of the whole timedirector of the Company during the quarter ended June 30 2015 year ended March 312015in non-compliance with the requirements of Section 197 and Section 198 read with ScheduleV to the Companies Act 2013 and year ended March 31 2014 in non-compliance with therequirements of Section 198 Section 269 and Section 309 read with Schedule XIII to theCompanies Act 1956 for which Central Government's approval has not been obtained.

b) Note no. 2.11 with respect to Management's assessment of carrying value ofinvestment in 6 of its subsidiary companies namely Educomp Infrastructure and SchoolManagement Limited Educomp Online Supplemental Service Limited Educomp Child CarePrivate Limited Educomp Professional Education Limited Vidya Mandir Classes LimitedEducomp Intelliprop Ventures Pte. Ltd. (formerly known as Educomp Intelprop Ventures Pte.Ltd.) and in its associate Greycells18 Media Limited. The Company has evaluated thecarrying value of its investments using business valuations performed by independentexperts/ its own assessment according to which the management is of opinion that noprovision for impairment is considered necessary in respect of these investments.

c) Note no. 8 wherein the Company has not considered impairment/diminution of tradereceivables from/ investment in Edu Smart Services Private Limited (ESSPL) in theintervening period in view of proposed merger of ESSPL with the Company.

d) Note no. 1(i)(b) wherein in the opinion of the management despite incurringsubstantial losses including during the current financial year and erosion of net worth asat March 312016 the audited standalone financial statements have been prepared on agoing concern basis in view of matters more fully explained in the said note.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditors' 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 "Annexure 1 a statement on the matters specified in paragraphs 3and 4 of the Order to the extent applicable.

(2) As required by Section 143(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 account as required by law have been kept by theCompany so far as it appears from our examination of those books;

c. The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;

d. In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

e. The matter described in sub-paragraph (c) and (d) under the Emphasis of Matterparagraph above in our opinion may have an adverse effect on the functioning of theCompany;

f. On the basis of written representations received from the directors as on March312016 and taken on record by the Board of Directors none of the directors isdisqualified as on March 312016 from being appointed as a director in terms of Section164 (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 we give ourseparate Report in "Annexure 2".

h. 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 standalone financial statements - Refer Note 15(a) in respect ofContingent Liabilities and Note 34 to the standalone financial statements in respect ofother pending litigations;

(ii) The Company did not have any long-term contracts including derivative contracts.Hence the question of any material foreseeable losses does not arise;

(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For Haribhakti & Co. LLP
Chartered Accountants
ICAI Firm Registration No.103523W
Sd/-
Pranav Jain
Place : Gurgaon Partner
Date : May 26 2016 Membership No.: 098308

ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'in the Independent Auditor's Report of even date to the members of Educomp SolutionsLimited on the standalone financial statements for the year ended March 312016]

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) During the year fixed assets have been physically verified by the management asper the regular programme of verification which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. As informed no materialdiscrepancies were noticed on such verification.

(c) The title deeds of immovable properties recorded in the books of account of theCompany are held in the name of the Company.

(ii) The inventory has been physically verified by the management during the year. Inour opinion the frequency of verification is reasonable. As informed no materialdiscrepancies were noticed on physical verification carried out during the year.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theAct. Accordingly paragraph 3 (iii)(a) 3

(iii)(b) and 3 (iii)(c) of the Order are not applicable to the Company.

(iv) According to the information and explanation given to us in respect of investmentsand guarantees the Company has complied with the provisions of Section 185 and 186 of theAct. Further the Company has not provided any loans or securities to any of the partiescovered under section 185 and 186 of Companies Act 2013.

(v) In our opinion and according to the information and explanations given to usthe Company has not accepted any deposits from the public within the provisions ofSections 73 to 76 of the Act and the rules framed there under.

(vi) We have broadly reviewed the books of account maintained by the Company in respectof products where the maintenance of cost records has been specified by the CentralGovernment under sub-section (1) of Section 148 of the Act and the rules framed thereunder and we are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained. We have not however made a detailed examination of the recordswith a view to determine whether they are accurate or complete.

(vii) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insurance incometax sales tax service tax value added tax customs duty excise duty cess and anyother material statutory dues applicable to it however there have been slight delay infew cases.

According to the information and explanations given to us no undisputed dues inrespect of provident fund employees' state insurance income tax sales tax service taxvalue added tax customs duty excise duty cess and any other material statutory duesapplicable to it which were outstanding at the year-end for a period of more than sixmonths from the date they became payable.

(b) According to the information and explanation given to us there are no duesoutstanding with respect to income tax sales tax value added tax customs duty exciseduty on account of any dispute. According to the information and explanation given to usdues of service tax which have not been deposited on account of any dispute are as under:

Name of the statute Nature of the dues Amount Disputed (In ' Millions) Amount paid under protest (In ' Millions) Period to which the amount relates Forum where dispute is pending
Finance Act 1994 Service Tax 25.46 16.98 2009-10 Customs Excise & Service Tax Appellate Tribunal New Delhi

(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowings to financial institutions banks anddebenture holders except as mentioned below:

a) Defaults during the year and rectified before the year- end:

Particulars Amount (In ' Millions) Period of Delay
Banks
IndusInd Bank 1.28 89
Axis Bank 95.72 91
Yes Bank 61.47 91
State Bank of Patiala 40.05 79-82
198.52

b) Defaults not rectified and existing as at March 312016:

Particulars Amount (In ' Millions) Period of Delay
Banks
Canara Bank 34.74 1-91
Central Bank of India 56.87 1-91
ICICI Bank 36.98 1-91
IndusInd Bank 1.51 1-91
State Bank of Bikaner & Jaipur 13.51 1-91
Syndicate Bank 14.79 1-91
IDBI Bank 273.00 1-91
Jammu & Kashmir Bank 117.60 1-91
Union Bank Of India 70.27 1-91
Axis Bank 90.04 1-91
Standard Chartered Bank 97.78 91-456
Yes Bank 124.40 91-273
DBS Bank 57.50 1-91
State Bank of India 7.26 1-91
State Bank of Patiala 38.45 1-91
Financial Institution
International Finance Corporation 180.91 76
PROPARCO 241.21 76
HP Financial Services Private Limited 61.64 30- 396
Reliance Capital Limited 12.00 366
IBM India Private Limited 32.58 16- 260
Total 1563.04

c) Defaults not rectified and existing as at March 312016 in respect of Interest onDebentures:

Particulars Amount (In ' Millions) Period of Default (Days)
Interest on Non 34.75 255-
convertible 312
Debentures

According to the information and explanations given to us the Company has not takenany loans or borrowings from government.

(ix) In our opinion and according to the information and explanations given to us theCompany has utilized the money raised by way of term loans during the year for thepurposes for which they were raised. The Company has not raised any money by way ofinitial public issue offer/ further public offer (including debt instruments) during theyear.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by the Company or any fraud on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such instance by themanagement.

(xi) According to the information and explanations given to us the Company has notpaid the managerial remuneration in accordance with the requisite approvals mandated bythe provisions of Section 197 read with Schedule V to the Act. The details are as follows:

Payment made to Amount paid in excess of the limits prescribed Amount due for recovery as at March 31 2016 (In ' Million) Steps taken to secure the recovery of the amount Remarks
Whole time Director 0.45 0.45 Refer Note 32 to the financial statements.

(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 to the Company.

(xiii) According to the information and explanation given to us all transactionsentered into by the Company with the related parties are in compliance with Sections 177and 188 of Act where applicable and the details have been disclosed in the FinancialStatements etc. as required by the applicable accounting standards.

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under audit. Accordinglyparagraph 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him.

(xvi) According to the information and explanation given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

For Haribhakti & Co. LLP
Chartered Accountants
ICAI Firm Registration No.103523W
Sd/-
Pranav Jain
Place : Gurgaon Partner
Date : May 26 2016 Membership No.: 098308

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'in the Independent Auditor's Report of even date to the members of Educomp SolutionsLimited on the standalone financial statements for the year ended March 312016.

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 EducompSolutions Limited ("the Company") as of March 31 2016 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 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.

Auditors' Responsibility

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 specified under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth issued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company;(2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 312016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the ICAI.

For Haribhakti & Co. LLP
Chartered Accountants
ICAI Firm Registration No.103523W
Sd/-
Pranav Jain
Place : Gurgaon Partner
Date : May 26 2016 Membership No.: 098308

.