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HCL Infosystems Ltd.

BSE: 500179 Sector: Consumer
NSE: HCL-INSYS ISIN Code: INE236A01020
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VOLUME 27385
52-Week high 22.80
52-Week low 5.94
P/E
Mkt Cap.(Rs cr) 243
Buy Price 7.36
Buy Qty 500.00
Sell Price 7.45
Sell Qty 826.00
OPEN 7.32
CLOSE 7.50
VOLUME 27385
52-Week high 22.80
52-Week low 5.94
P/E
Mkt Cap.(Rs cr) 243
Buy Price 7.36
Buy Qty 500.00
Sell Price 7.45
Sell Qty 826.00

HCL Infosystems Ltd. (HCL-INSYS) - Auditors Report

Company auditors report

To the Members of HCL Infosystems Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of HCL Infosystems Limited(the Company) which comprise the standalone balance sheet as at 31 March 2019 and the standalone statement of profit and loss (including other comprehensive income) standalone statement of changes in equity and standalone statement of cash flows for the year then ended and notes to the standalone financial statements including a summary of the significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us the aforesaid standalone financial statements give the information required by the Companies Act 2013 (Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31 March 2019 and loss and other comprehensive income changes in 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) specified under section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor's Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.

Description of Key Audit Matters:

Applicability of Ind AS 115 for recognition of revenue See note 2.19 to the standalone financial statements

The key audit matterHow the matter was addressed in our audit
Ind AS 115 Revenue from contracts with period beginning on or after 1 April 2018 - replacing the existing revenue recognition guidance.The primary procedures we performed in addressing this key audit matter customers has become effective for annual included:
Considering the appropriateness of Company's revenue recognition policy and its compliance in terms of Ind AS 115 Revenue from contracts with customers.
The application of the new revenue recognition - standard involves certain key judgments relating to identification of distinct performance - obligations determination of transaction price of the identified performance obligations and the appropriateness of the basis used to - measure revenue.Assessing the design and testing the operating effectiveness of internal controls related to revenue recognition. Performing sample tests of individual revenue contracts and other related documents.
We identified the application of the accounting standard Ind AS 115 `Revenue from contracts with customers' as a key audit matterAssessing the relevant disclosures made within the Ind AS financial statements.

Other Information

The Company's management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company's annual report but does not include the financial statements and our auditors' report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

The Company's management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs profit/ loss and other comprehensive income changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India including the Indian Accounting Standards (Ind AS) specified under section 133 of the

Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error. In preparing the standalone financial statements management and Board of Directors are responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

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

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

 Identify and assess the risks of material misstatement of the standalone financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.

 Obtain an understanding of internal control relevant to the audit in order to design 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 has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

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

 Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the standalone 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's report. However future events or conditions may cause the Company to cease to continue as a going concern.

 Evaluate the overall presentation structure and content of the standalone financial statements including the disclosures and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant defficiencies in internal control that we identify during our audit.

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

From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016 (the Order) issued by the Central Government in terms of section 143 (11) of the Act we give in the Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

(A) 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 best of 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 the Company so far as it appears from our examination of those books.

c) The standalone balance sheet the standalone statement of profit and loss (including other comprehensive income) the standalone statement of changes in equity and the standalone statement of cash flows dealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind AS specified under section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31 March 2019 taken on record by the Board of Directors none of the directors as on 31 March 2019 from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company andthe operating effectiveness of such controls refer to our separate Report in Annexure B.

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

i. The Company has disclosed the impact of pending litigations as at 31 March 2019 on its financial position in its standalone financial statements - Refer Note 38 to the standalone financial statements;

ii. The Company has long term contracts as at 31 March 2019 for which there were no material foreseeable losses. The Company did not have any long-term derivative contracts as at 31 March 2019.

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

iv. The disclosures in the standalone financial statements regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made in these financial statements since they do not pertain to the financial year ended 31 March 2019.

(C) With respect to the matter to be included in the Auditors' Report under section 197(16):

In our opinion and according to the information and explanations given to us the remuneration paid by the company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.

Annexure A To Independent Auditors' Report

To the Members of HCL Infosystems Limited on the standalone financial statement for the year ended 31 March 2019 we report the following:

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

(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified by the management in a phased manner over a period of three years. In our opinion this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme certain fixed assets were physically verified during the year and no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company the title deed of immovable properties included in fixed assets are held in the name of the Company except for the immovable property mention below:

(Rs. in crores)
ParticularsGross BlockNet Block
Land and Buildings at Ambattur Chennai5.583.13

(ii) The physical verification of inventory have been conducted at reasonable intervals by the management during the year. The discrepancies noticed on physical verification of inventory as compared to books records were not material.

(iii) According to the information and explanations given to us the Company has not granted any loans secured or unsecured to Companies firms limited liability partnerships or other parties covered in the register maintained under Section 189 of the Act. Accordingly the provisions of clause 3 (iii) of the order not applicable to the Company.

(iv) According to the information and explanations given to us there are no loans guarantee and security given by the Company in respect which provisions of Section 185 of the Companies Act 2013 are applicable. Further provisions of Section 186 of the Companies Act 2013 have been complied with respect to loans given investments made guarantees and security given by the Company.

(v) The Company has not accepted any deposits from the public within the meaning of directive issued by the Reserve Bank of India provisions of Section 73 to 76 of the Act any other relevant provisions of the Act and the relevant rules framed thereunder.

(vi) The Central Government has not prescribed the maintenance of cost records under sub-section (1) of Section 148 of the Act for any of the products of the Company.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident fund Employees' state insurance Income tax Sales tax Service tax Goods and Services tax Duty of customs Duty of excise Value added tax Cess and other material statutory dues have generally been regularly deposited with the appropriate Authorities.

According to information and explanations given to us no undisputed amounts payable in respect of Provident fundEmployees' state insurance Income-tax Sales tax Service tax Goods and service tax Duty of customs Duty of excise value added tax cess and any other material statutory dues were in arrears as at 31 March 2019 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues of Income-tax Sales tax Service tax Duty of custom Duty of excise Value added tax and Goods and Service tax which have not been deposited by the Company on account of disputes except for the following:

Nature of the statuteNature of duesAmountAmount depositedPeriod to which the amount relatesForum where the dispute is pending
(Rs. in crores)(Rs. in crores)
Income tax Act 1961Income tax1.63-2004-2005Assessing Officer/Income tax Appellate tribunal/CIT
2005-2006
2006-2007
Income tax Act 1961Income tax3.00-2011-2012CIT (Appeal)
Income tax Act 1961Income tax0.78-2012-2013CIT (Appeal)
Income tax Act 1961Income tax19.19-2013-2014Income tax Appellate Tribunal
Income tax Act 1961Income tax0.22-2014-2015CIT (Appeal)
Central Excise Act 1944.Excise7.041.402002 -2013Commissioner of Appeals/ CESTAT/ High Court
Customs Tari_ Act 1975Custom40.475.002005-2009CESTAT
Finance Act 1994Service Tax430.1719.492003 -2016CESTAT/High Court/ Commissioner of Appeals
Andhra Pradesh Value Added Tax Act 2005Sales Tax0.07-2008-09Deputy Commissioner Appeals
Bihar Value Added Tax Act 2005Sales Tax13.145.272006-07Joint Commissioner
2016 -17Appeals/ High Court / Assistant Commissioner of Sales tax
Delhi Sales Tax Act 1975Sales Tax0.080.012003 -2006Assistant Commissioner Sales tax/Joint Commissioner Appeals/ Tribunal Sales Tax
Delhi Value Added Tax Act 2004Sales Tax12.881.262006 - 2014Tribunal of Sales tax/ Deputy Commissioner Appeals
Gujarat Value Added Tax Act 2003Sales Tax0.210.042013-14Assistant Commissioner of Sales tax (Gujrat)
Haryana Value Added Tax ActSales Tax2.12-2011-15Assessing Authority
Himachal Pradesh Value Added Tax Act 2005Sales Tax0.020.102006-07 2012 -13Assistant Commissioner of Sales tax
Jammu & Kashmir Value Added tax Act 2005Sales Tax2.710.042008-09Deputy Commissioner Appeals
Jharkhand Value Added Tax Act 2005Sales Tax1.340.052011-12Joint Commissioner Appeals
Karnataka Value Sales Tax1.962.042006-07Deputy Commissioner
Added Tax Act 20032012-13Appeals/ Assessing Officer / High Court
Kerala General Sales Tax Act 1963Sales Tax1.350.892001-17Tribunal of Sales Tax / Deputy Commissioner Appeals/ Commercial Tax Officer
M.P. Value Added Tax Act 2002Sales Tax0.250.172011-14Joint Commissioner Appeals
Maharashtra Value Added Tax Act 2002Sales Tax4.661.162004-13Joint Commissioner Appeals
Orissa Value Added Tax Act 2004Sales Tax2.120.242012-14Deputy Commissioner Appeals / High Court
Punjab Value Added Tax Act 2005Sales Tax7.500.562007-08Deputy Commissioner
2010-11Appeals / High Court
Rajasthan Value Added Tax Act 2003Sales Tax181.4880.032001-02Commercial Tax Officer / High Court/ Deputy Commissioner Appeals/ tribunal of Sales tax
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
Tamilnadu Value Added Tax Act 2006Sales Tax0.346.682004-05Commercial tax Officer / Deputy Commissioner Appeals
2006-07
2008-09
2013-14
2015-16
The Uttaranchal Value Added Tax Act-2005Sales Tax0.620.552005-06Deputy Commissioner Commercial Tax
2011-12
2012-13
2013-14
U.P. Trade Tax Act 1948Sales Tax0.814.352002-08Assessing Officer / Tribunal of Sales Tax / High Court
U.P. Value Added Tax Act 2008Sales Tax16.135.152008 -16Additional Commissioner (Appeals) / Joint Commissioner Appeals / Tribunal of Sales Tax / Commercial Tax Officer
West Bengal Sales Tax Act 1994Sales Tax8.232.732006-16Board of Sales Tax / Additional Commissioner Appeals / Tribunal of Sales Tax

(viii) According the information and explanations given to us the Company has not defaulted in repayment of loans or borrowings to any banks or financial institution. The Company did not have any outstanding loans or borrowings from Government and there are no debentures issued during the year or outstanding as at 31 March 2019.

(ix) According to the information and explanations given to us the moneys raised by way of term loans have been applied for the purpose for which they were obtained. The Company has not raised any moneys by way of initial public offer or further public offer (including debt instruments).

(x) According to the information and explanations given to us no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

(xi) According to the information and explanations given to us and based on our examination of records of the Company managerial remuneration has paid/provided by the Company in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us the Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us and on the basis of our examination of the records of the Company all transactions with the related parties are in compliance with the Section 177 and Section 188 of the Act where applicable and details of such transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on the basis of our examination of records of the Company the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us the Company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly paragraph 3(xv) of the Order is not applicable to the Company.

(xvi) According to the information and explanations given to us the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

Annexure B To Independent Auditors' Report

Annexure B to the Independent Auditors' report on the standalone financial statements of HCL Infosystems Limited for the period ended 31 March 2019.

Report on the internal financial controls with reference to the aforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (Referred to in paragraph 1(A)(f) under `Report on other Legal and Regulatory Requirements' section of our report of even date) Opinion

We have audited the internal financial controls with reference to standalone financial statements of HCL Infosystems Limited (the Company) as of 31 March 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

In our opinion the Company has in all material respects adequate internal financial controls with reference to financial statements and such internal financial controls were operating effectively as at 31 March 2019 based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the Guidance Note).

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note. These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Companies Act 2013 (hereinafter referred to as the Act).

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls with reference to financial statements. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements were established and maintained and whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of such internal financial controls assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgement including the assessment of the risks of material misstatement of the standalone financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls with 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 a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial controls with reference to financial statements include those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition use or disposition of the company's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial controls with Reference to Financial Statements

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

For B S R & Associates LLP
Chartered Accountants
Firm's Registration No. 116231W/W-100024
Manish Gupta
Place: GurugramPartner
Date: 30 May 2019Membership No.: 095037