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Expleo Solutions Ltd.

BSE: 533121 Sector: IT
NSE: EXPLEOSOL ISIN Code: INE201K01015
BSE 14:30 | 25 Jan 1572.05 79.10
(5.30%)
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1464.20

HIGH

1591.65

LOW

1422.20

NSE 14:24 | 25 Jan 1573.30 79.25
(5.30%)
OPEN

1442.50

HIGH

1600.00

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1418.75

OPEN 1464.20
PREVIOUS CLOSE 1492.95
VOLUME 3237
52-Week high 1874.00
52-Week low 450.00
P/E 38.17
Mkt Cap.(Rs cr) 1,611
Buy Price 1570.35
Buy Qty 1.00
Sell Price 1572.50
Sell Qty 1.00
OPEN 1464.20
CLOSE 1492.95
VOLUME 3237
52-Week high 1874.00
52-Week low 450.00
P/E 38.17
Mkt Cap.(Rs cr) 1,611
Buy Price 1570.35
Buy Qty 1.00
Sell Price 1572.50
Sell Qty 1.00

Expleo Solutions Ltd. (EXPLEOSOL) - Auditors Report

Company auditors report

To the Members of Expleo Solutions Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying Standalone Ind AS financial statements of ExpleoSolutions Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2021 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flows for the year thenended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2021 its profit changesin equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial Statements section of our report. We are independent of the Company inaccordance with 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 wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS financial statements of the current period. Thesematters were addressed in the context of our audit of the financial statements as a wholeand in forming our opinion thereon and we do not provide a separate opinion on thesematters. We have determined the matters described below to be the key audit matters to becommunicated in our report.

Key Audit Matter Description Our Response
1. 1. Revenue Recognition – Accuracy of recognition of revenue for fixed-price contracts on percentage of completion method involving critical estimates. Our procedures included:
The Company derives revenue from software services which involve primarily delivering software validation and verification services to the banking financial services and insurance industry worldwide. Arrangements with customers include fixed-price contracts revenue whereof is recognised on proportionate completion method on the basis of the work completed. Assessment of the appropriateness of the Company's revenue recognition policy for fixed-price contracts to ensure that it meets the recognition and measurement principles enumerated in Ind AS 115 including disclosures in the financial statements.
The use of proportionate completion method requires the Company to estimate the efforts or costs expended to date as a proportion to total efforts or costs to be expended. Obtained an understanding of the process and related controls for appropriate recognition of revenue. Evaluating the design and implementation and testing the operating effectiveness of such controls over the revenue recognition and measurement criteria.
These estimates of efforts or costs to be expended has a high inherent uncertainty which is based on the judgements made by the Management in ascertaining the costs and the efforts required to complete the remaining contractual performance obligations. In view of the same there is a risk of revenue for the year being misstated due to incorrect recognition of accrued or deferred revenue as a result of using overstated / understated estimates of the costs and efforts to complete the remaining contractual performance obligations. Tested fixed price contracts to assess whether the revenues recognised to date were appropriate; this work included reviewing stage of completion by reference to post year end data and understanding budget versus actual variances where applicable and the impact on revenue to be recognised by reference to the stage of completion.
(Refer Note 2(b)(i) and Note 2(c) to the Standalone Ind AS financial statements) We performed cut-off testing for a sample of revenue transactions around the period end date to check that they were recognised in the appropriate period.
Evaluated the judgements made through discussions with project staff.
Assessing the adequacy of the Company's disclosures about the degree of estimation involved in revenue recognition.

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report namely the Chairman'sOverview the Performance Highlights – Decade at a glance (on a consolidated basis)the Director's Report including annexures to the Director's Report the BusinessResponsibility Report the Management Discussion and Analysis and the Corporate GovernanceReport etc. but does not include the Standalone Ind AS financial statements and ourauditor's report thereon. Our opinion of the Standalone Ind AS financial statements doesnot cover the other information and we do not express any form of assurance conclusionthereon. In connection with our audit of the Standalone Ind AS financial statements ourresponsibility is to read the other information identified above and in doing so considerwhether the other information is materially inconsistent with the financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Responsibilities of the Management and Those Charged with Governance for the StandaloneInd AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Standalone Ind AS financialstatements that give a true and fair view of the financial position financial performance(including other comprehensive income) changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.

In preparing the Ind AS financial statements management is responsible for assessingthe Company'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 Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the Ind AS financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these Ind AS financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

(a) Identify and assess the risks of material misstatement of the Ind AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

(b) Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

(c) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

(d) 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.

(e) Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of the usersof the financial statements may be influenced. We consider quantitative materiality andqualitative factors in (i) planning the scope of our audit work and in evaluating theresults of our work; and (ii) to evaluate the effect of any identified misstatements inthe 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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

As required by 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 inparagraphs 3 and 4 of the Order to the extent applicable. 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 (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account.

(d) In our opinion the aforesaid Standalone Ind AS financial statements comply withthe Indian Accounting Standards (Ind AS) specified under section 133 of the Act read withrelevant rules issued thereunder.

(e) On the basis of the written representations received from the directors of theCompany as on March 31 2021 and taken on record by the Board of Directors none of thedirectors of the Company is disqualified as on March 31 2021 from being appointed as adirector in terms of section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us theremuneration paid/ provided by the Company to its directors during the year is inaccordance with the provisions of Section 197 of the Act.

(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 Ind AS financial statements – Refer Note 37 to theStandalone Ind AS financial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

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

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

The Annexure referred to in Para 1 ‘Report on Other Legal and RegulatoryRequirements' in our Independent Auditors' Report to the members of the Company on theStandalone Ind AS Financial Statements for the year ended March 31 2021.

Statement on Matters specified in paragraphs 3 & 4 of the Companies (Auditor'sReport) Order 2016:

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

(b) As explained to us the Company has a programme for physical verification of fixedassets at periodic intervals. In our opinion the period of verification is reasonablehaving regard to the size of the company and nature of its assets. No materialdiscrepancies were noticed on such verification.

(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 immovable properties areheld in the name of the Company.

ii. The Company is in the business of rendering software testing service and does nothave any inventory and hence the provisions of paragraph 3 (ii) of the Order are notapplicable.

iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Act. Therefore the provisions of sub-clauses (a) (b) and (c) ofparagraph 3(iii) of the Order are not applicable. iv. In our opinion and according to theinformation and explanations given to us provisions of Section 186 of the Act in respectof investments made have been complied with by the Company. In our opinion and accordingto the information and explanations given to us the Company has not advanced any loans tothe persons covered under Section 185 and Section 186 of the Act or given guarantees orgranted securities under Section 186 of the Act. v. In our opinion and according to theinformation and explanations given to us the Company has not accepted any deposits fromthe public and hence the directives issued by the Reserve Bank of India and the provisionsof Section 73 to 76 or any other relevant provisions of the Act and the rules framedthereunder are not applicable.

vi. According to the information and explanations given to us the maintenance of costrecords under sub section (1) of Section 148 of the Act is not applicable to the Companyunder the Companies (Cost Records and Audit) Rules 2014.

vii. (a) According to the information and explanations given to us and the recordsexamined by us the Company is generally regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Sales Tax Service TaxDuty of Customs Duty of Excise Value Added Tax Cess Goods and Service Tax (GST) andany other statutory dues with the appropriate authorities wherever applicable. We havebeen informed that there are no undisputed dues which have remained outstanding as atMarch 31 2021 for a period of more than six months from the date they became payable.

(b) According to the information and explanation given to us there are no duesoutstanding of Income Tax Sales Tax Service Tax Duty of Customs Duty of Excise Valueadded tax and Goods and Service Tax on account of any dispute other than the following:

Sr. No. Name of the statute Amount (Rs. in million) Financial Year (F.Y.) to which the amount relates Forum where Dispute is Pending
1. ncome I Tax Act 1961 19.33 2008-09 ncome I Tax Appellate Tribunal
2. ncome I Tax Act 1961 47.04 2009-10 Commissioner of Income Tax (Appeals)
3. ncome I Tax Act 1961 5.04 2011-12 ncome I Tax Appellate Tribunal
4. ncome I Tax Act 1961 1.57 2012-13 ncome I Tax Appellate Tribunal
5. ncome I Tax Act 1961 5.70 2013-14 Deputy Commissioner Income Tax
6. ncome I Tax Act 1961 9.67 2014-15 Commissioner of Income Tax (Appeals)
7. ncome I Tax Act 1961 1.70 2015-16 Commissioner of Income Tax (Appeals)
8. ncome I Tax Act 1961 2.85 2016-17 Commissioner of Income Tax (Appeals)
9. ncome I Tax Act 1961 0.55 2017-18 Commissioner of Income Tax
10. Finance Act 1994 633.58 2011-12 to 2015-16 The Customs Excise and Service Tax Appellate Tribunal (CESTAT)
11. Finance Act 1994 118.50 April 2016 to June 2017 The Customs Excise and Service Tax Appellate Tribunal (CESTAT)

viii. According to the information and explanations given to us and based on thedocuments and records produced to us the Company does not have loans or borrowings fromfinancial institutions banks government or debenture holders. ix. According to theinformation and explanations given to us the Company has neither raised money by way ofinitial public offer or further public offer (including debt instruments) nor taken anyterm loans during the year. x. During the course of our examination of the books ofaccount and records of the Company and according to the information and explanation givento us and representations made by the Management no material fraud by or on the Companyby its officers or employees has been noticed or reported during the year. xi. Accordingto the information and explanations given to us and based on our examination of therecords of the Company the Company has paid/provided managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith 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 hence the provisions of paragraph 3(xii) of the Order arenot applicable. xiii. According to the information and explanations given to us and basedon our examination of the records of the Company transactions with related parties are incompliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the Standalone Ind AS Financial Statements as requiredby the applicable accounting standards. xiv. According to the information and explanationsgiven to us and based on our examination of the records the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. xv. According to the information and explanations given to usand based on our examination of the records the Company has not entered into non-cashtransactions with the directors or persons connected with them. Hence the provisions ofsection 192 of the Act are not applicable. xvi. The Company is not required to beregistered under Section 45-IA of the Reserve Bank of India Act 1934 hence theprovisions of paragraph 3(xvi) of the Order are not applicable.

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Paragraph 2(f) ‘Report on Other Legal and Regulatory Requirements'in our Independent Auditor's Report to the members of the Company on the Standalone Ind ASfinancial statements for the year ended March 31 2021.

Report on the Internal Financial Controls with reference to financial statements underClause (i) of Subsection 3 of Section 143 of the Act

We have audited the internal financial controls with reference to financial statementsof Expleo Solutions Limited ("the Company") as of March 31 2021 in conjunctionwith our audit of the Ind AS financial statements of the Company for the year ended onthat 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 Reporting (the"GuidanceNote") issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding 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 Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing issued by ICAI anddeemed to be prescribed under Section 143(10) of the Act to the extent applicable to anaudit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the ICAI. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to 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 system with reference to financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements included obtaining an understanding of internalfinancial controls with reference to financial statements assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the Standalone Ind AS 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 systemwith reference to financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A Company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Standalone Ind AS financial statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial control with reference to financial statements includes those policies andprocedures 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 ofStandaloneIndASfinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciplesandthat receipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the StandaloneInd AS financial statements.

Inherent Limitations of Internal Financial Controls with reference to FinancialStatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2021 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 FinancialReporting" issued by the Institute of Chartered Accountants of India.

For KALYANIWALLA & MISTRY LLP

CHARTERED ACCOUNTANTS

Firm Registration Number 104607W/W100166

FARHAD M. BHESANIA

PARTNER

Membership Number 127355

UDIN: 21127355AAAAEI9708

Place : Mumbai

Date : May 20 2021

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