To the Members of Infibeam Avenues Limited (formerly known as Infibeam IncorporationLtd)
Report on the Audit of the Standalone IND AS financial Statements
We have audited the accompanying standalone IND AS financial statements of InfibeamAvenues Limited (formerly known as Infibeam Incorporation Ltd) ("theCompany") which comprise the Balance Sheet as at March 31 2020 the Statement ofProfit and Loss (including Other Comprehensive Income) the Statement of Changes in Equityand the Statement of Cash Flows for the year ended on that date and a summary of thesignificant accounting policies and other explanatory information (hereinafter referred toas "the standalone IND As financial statements")
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 Indian Accounting Standards prescribedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended ("Ind AS") and other accounting principles generally acceptedin India of the state of affairs of the Company as at March 312020 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone IND AS financial statements in accordance withthe Standards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone IND AS financial Statements sectionof our report. We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants of India (ICAI) together with theindependence requirements that are relevant to our audit of the standalone IND ASfinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion on the standalone INDAS financial statements
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone IND AS financial statements for the year endedMarch 312020. These matters were addressed in the context of our audit of the standaloneIND AS financial statements as a whole and in forming our opinion thereon and we do notprovide a separate opinion on these matters. We have determined the matters describedbelow to be the key audit matters to be communicated in our report.
|Sr No Key Audit Matter ||Auditors Response |
|1. Goodwill Impairment testing and Impact of COVID-19 thereon ||Principal Audit Procedures |
|Included on the balance sheet is an intangible assets balance of Rs.18771.08 Million as on March 31 2020 which relates to goodwill of Rs.16124.18 million which arose mainly from past acquisition and other intangible assets like Computer Software IT Platform Trademark and Customer relationship of Rs.2646.90 million are classified as other Intangible Assets. ||Focusing on Infibeam Avenues Ltd business we understood evaluated and validated management's key controls over the impairment assessment process. The company had obtained a valuation report from external independent valuer. On observing the same following audit procedures were adopted: |
|On account of prevalent financial economic and health crises caused due to global pandemic - COVID-19 having impact on the assumptions used for the continuity of operations and thus having further impact on the assessment of impairment of goodwill having indefinite useful life. || Evaluating the methodical and mathematical accuracy of the model used for the impairment testing the appropriateness of the assumptions and the methodology used to prepare its cash flow forecasts. gaining an understanding and assessing the reasonableness of business plans by comparing them to prior year's assumptions; |
|The Company has prepared cash flow projections and believes it has sufficient liquidity based on the available liquid cash and the expected cash to be generated from operations to meet its financial obligations as they fall due for the following twelve months. || Comparing the current years actual results included in the model to consider whether forecasts including assumptions that with hindsight have been appropriate. |
|The Company is required to perform impairment assessments of goodwill annually. For intangible assets with useful lives the Company || discussing the potential changes in key drivers as compared to previous year/actual performance with management and considering impact of COVID-19 in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable. |
|is required to review these for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable and at least annually review whether there is any change in their expected useful lives. || |
|For the purpose of performing impairment assessments all intangible assets including goodwill have been allocated to groups of cash generating units ("CGUs"). The recoverable amount of the underlying CGUs is supported by value-in-use calculations which are based on future discounted cash flows. Management concluded that the intangible assets including goodwill were not impaired as of March 312020. || recalculating the value in use calculations |
|The above assessment factoring impact of COVID-19 on continuity of its operations and thereupon on annual impairment of goodwill having indefinite useful life is considered as significant accounting judgement and estimate (Note 34(17) to the standalone Ind - AS financial statements) and a key audit matter because the assumptions on which the tests are based are highly judgmental and are affected by future market and economic conditions which are inherently uncertain and because of the materiality of the balances to the standalone financial statements as a whole. || challenging the robustness of the key assumptions used to determine the value in use including the allocation of goodwill to the adequate CGUs cash flow forecasts long-term growth rates and the discount rates based on our understanding of the commercial prospects of the related CGUs and by comparing them with publicly available data where possible; |
| ||We also considered the appropriateness of disclosures in the standalone IND AS financial statements and conclude that our audit procedures did not lead to any reservations regarding the goodwill impairment test. |
Information Other than the Standalone IND AS financial Statements and Auditor's ReportThereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone IND AS financial statements and our report thereon.
Our opinion on the standalone IND AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone IND AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone IND AS financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto 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 Act with respect to the preparation of these standalone IND AS financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalone IND ASfinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone IND AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors is responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the Standalone IND AS financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone IND ASfinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone 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:
Identify and assess the risks of material misstatement of the standalone IND ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act 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 standalone IND AS financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of the standalone IND ASfinancial statements including the disclosures and whether the standalone IND ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the standalone IND AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the 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 IND AS financialstatements of the current year and are therefore the key audit matters. We describe thesematters in our auditor's report unless law or regulation precludes public disclosure aboutthe matter or when in extremely rare circumstances we determine that a matter should notbe communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's report) Order2016 ("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 specifiedin paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and 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 Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone IND AS financial statements comply with theInd AS specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct.
f) 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". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
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:
During the financial year the company has not paid any remuneration to any of thedirectors.
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 as amended inour opinion and to the best of our information and according to the explanations given tous:
a. The Company has disclosed the impact of pending litigations on its financialposition in its standalone IND AS financial statements.
b. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
c. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
For Shah & Taparia
Firm Registration No: 109463W
Membership Number: 103840
Place of Signature: Gandhinagar
Date: June 5 2020
Annexure A referred to in Para 1 of the Independent Auditors Report
With reference to the Annexure A referred to in the Independent Auditors' Report to themembers of the Company on the standalone IND AS financial statements for the year endedMarch 312020 we report the following:
1) 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 all fixed assets are verified on annual basis. In our opinion this periodicity ofphysical verification is reasonable having regard to the size of the company and thenature of its assets. In accordance with the policy the Company has physically verifiedthe fixed assets during the year and we are informed that no material discrepancies werenoticed upon such verification.
C) According to the information and explanations given by the management the titledeeds of immovable properties included in Property Plant and Equipment are held in thename of the Company.
2) The Company is a service company primarily rendering website development andmaintenance services (Web Services) and payment gateway services. Accordingly it does nothold any physical inventories. Thus paragraph 3(ii) of the Order is not applicable to theCompany.
3) A) The Company has granted loans to two Companies covered in the register maintainedunder Section 189 of the Companies Act 2013. In our opinion and according to theinformation and explanations given to us the terms and conditions of loans are notprejudicial to the Company's interest.
B) The loans granted to Company listed in the register maintained under Section 189 ofthe Act the borrowers have been regular in the payment of the principle and interest asstipulated.
C) There are no amounts of loans granted to Company listed in the register maintainedunder Section 189 of the Companies Act 2013 which are overdue for more than ninety days.
4) In our opinion and according to the information and explanations given to usprovisions of Section 185 of the Companies Act 2013 in respect to loans to directorsincluding entities in which they are interested and in respect of loans and advances givenhave been complied with by the Company. The Company has not granted any guarantees andsecurities during the year. In our opinion and according to the information andexplanations given to us the Company has made investment referred in Section 186 of theAct and have complied with the provisions of Section 186 of the Act.
5) The Company has not accepted any deposits within the meaning of Sections 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of clause 3(v) of the Order are not applicable and hence not commentedupon.
6) To the best of our knowledge and as explained the Central Government has notspecified the maintenance of cost records under Section 148(1) of the Companies Act 2013for the services of the Company. Accordingly paragraph 3(vi) of the Order is notapplicable.
7) A) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including income-tax provident fundemployee state insurance duty of customs goods and services tax professional tax cessand other material statutory dues are generally regularly deposited during the yearhowever there have been delays in few cases of payment of professional tax employeestate insurance provident fund and tax deducted at source (TDS). As explained to us theCompany did not have any dues on account of sales tax value added tax and service taxduring the year.
B) According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' State Insurance Income-tax Goods andServices tax duty of Customs Cess and other material statutory dues were in arrears asat March 31 2020 for a period of more than six months from the date they became payableexcept professional tax of Rs.0.2 Mn.
C) According to the information and explanations given to us no undisputed amountspayable in respect of service tax income-tax goods and services tax professional taxduty of customs and other material statutory dues which have not been deposited with theappropriate authorities on account of any dispute other than those mentioned below:
|Name of Statue ||Nature of Dues ||Amount involved ||Period to which amount pertains ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax Demands ||3.32 millions ||2012-13 and 2013-14 ||Commissioner of Income Tax (Appeals) |
8) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of loans or borrowings to banks orfinancial institutions during the year. The Company did not have any due payable to thedebenture holders and government during the year.
9) According to information and explanations given by the management and confirmationof the monitoring bank monies raised by the Company by way of initial public offer wereapplied for the purpose for which they were raised though idle/surplus funds which werenot required for immediate utilization have been invested in fixed deposits. The maximumamount of idle/surplus funds invested during the year was Rs.251.5 million. During theyear the Company has fully utilized the remaining amount of Rs.251.5 million as per theIPO objects and there is no deviation of utilization of funds. Further according to theinformation and explanations given by the management the Company has utilized the moniesraised by way of term loans for the purposes for which they were raised. There was nofurther public offer (including debt instrument) during the year.
10) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no fraud on the Companyby the officers and employees of the Company has been noticed or reported during the year.
11) According to the information and explanations given by the management themanagerial remuneration has been paid/provided in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.
12) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.
13) According to the information and explanations given by the management and on thebasis of relevant records and representation the transactions with the related partiesare in compliance with section 177 and 188 of Companies Act 2013 where applicable and thedetails have been disclosed in the notes to the standalone IND-AS financial statements asrequired by the applicable accounting standards.
14) According to the information and explanations given by the management the Companyhas not made preferential allotment or private placement of shares or fully convertibledebentures during the year.
15) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of the Act.
16) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.
For Shah & Taparia
Firm Registration No: 109463W
Membership Number: 103840
Place of Signature: Gandhinagar
Date: June 5 2020
Annexure B referred in para 2 of the Independent 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 with reference to standalone IND ASfinancial statements of Infibeam Avenues Limited (formerly known as InfibeamIncorporation Ltd) ("the Company") as of March 31 2020 in conjunction withour audit of the standalone IND AS 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 with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India ("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
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 ICAI. Those Standards and the Guidance Note require that wecomply 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 about the adequacy ofthe internal financial control system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the standaloneIND 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 control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that:
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) 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 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.
In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to standalone IND AS financial statements andsuch internal financial controls with reference to standalone IND AS financial statementswere operating effectively as at March 312020 based on the internal control withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note issued by the ICAI.
For Shah & Taparia
Firm Registration No: 109463W
Membership Number: 103840
Place of Signature: Gandhinagar
Date: June 5 2020