To the Members of Accel Frontline Limited
Report on the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of Accel FrontlineLimited ('the Company') which comprise the Balance Sheet as at 31 March 2018 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information in which areincorporated the returns for the year ended on that date audited by the branch auditors ofthe Company's branch at Singapore.
Management's Responsibility for the Standalone Financial Statements
2. 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 of thesestandalone financial statements that give a true and fair view of the state of affairs(financial position) profit or loss (financial performance including other comprehensiveincome) cash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards('lndAS') specified under Section 133 of the Act. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
3. Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.
4. 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 thereunder.
5. 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 whetherthese standalone financial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial controls relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on these standalone financial statements.
Basis for Qualified Opinion
8. As disclosed in Note 33 to the standalone financial statements the Company has madeinvestments in its subsidiary company Accel IT Resources Limited amounting to INR 790lakhs and has given loans to such subsidiary company amounting to INR 622 lakhs which areoutstanding as at 31 March 2018. The subsidiary company has incurred losses and its networth as at 31 March 2018 is fully eroded. The management has drawn up business plans forthe subsidiary company and is of the view that its investment and loans advanced to thesubsidiary company will be recovered over the years. However in the absence of bindingarrangements and other sufficient appropriate supporting audit evidence in respect of thebusiness projections prepared by the management we are unable to comment on the carryingvalue of the aforementioned investments and financial assets - loans as at 31 March 2018and the impact of adjustments if any that may be required to such carrying values in theaccompanying standalone financial statements.
9. In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matters described in the Basis forQualified Opinion paragraph the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India including Ind ASspecified under Section 133 of the Act of the state of affairs (financial position) ofthe Company as at 31 March 2018 and its profit (financial performance including othercomprehensive income) its cash flows andthe changes in equity for the year ended on thatdate.
Emphasis of Matter
10. We draw attention to Note 32 to the standalone financial statements relating to theCompany's inventory valuation as at 31 March 2018 and related disclosures. The Company inthe current year has followed and complied with the requirements of Ind AS 2 - Valuationof Inventory and has accounted for the impact relating to non-compliance with accountingpolicy in the earlier years. As a result of impracticability of determining the impact onthe comparatives financial information including the impact on beginning of such perioddue to reasons disclosed in the aforesaid note the change in the valuation of Inventoryhas been made only prospectively as at 31 March 2018 in accordance with Ind AS 8 -Accounting Policies Changes in Accounting Estimates and Errors. Accordingly to thisextent the current period figures and corresponding figures are not comparable. Ouropinion is not modified in respect of this matter.
11. The Company had prepared separate sets of statutory financial statements for theyear ended 31 March 2017 and 31 March 2016 in accordance with Accounting Standardsprescribed under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014 (as amended) on which we issued auditor's reports to the shareholders of theCompany dated 01 August 2016 and 26 May 2017 respectively. These financial statements havebeen adjusted for the differences in the accounting principles adopted by the Company ontransition to Ind AS which have also been audited by us. Our opinion is not modified inrespect of this matter.
Report on Other Legal and Regulatory Requirements
12. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India interms of Section 143(11) of the Act we give in theAnnexure A a statement on the matters specified in paragraphs 3 and 4 of the Order.
13. Further to our comments in Annexure A as required by Section 143(3) of the Act wereport that:
a) we have sought and except for the possible effects of the matter described in theBasis for Qualified Opinion paragraph obtained all the information and explanations whichto the best of our knowledge and belief were necessary for the purpose of our audit;
b) except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books and properreturns adequate for the purposes of our audit have been received from the branch notvisited by us;
c) the reports on the accounts of the branch office of the Company audited underSection 143(8) of the Act by the branch auditor has been sent to us and have been properlydealt with by us in preparing this report;
d) the standalone financial statements dealt with by this report are in agreement withthe books of account and with the returns received from the branch not visited by us;
e) except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph in our opinion the aforesaid standalone financial statements complywith Ind AS specified under Section 133 of the Act;
f) on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2018 from being appointed as a director in terms of Section 164(2) of the Act;
g) the qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph;
h) we have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as on 31 March 2018 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 09 May 2018 as per Annexure B expressed a qualified opinion;
i) with respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 (as amended) inour opinion and to the best of our information and according to the explanations given tous:
i. the Company as detailed in Note 43 to the standalone financial statements hasdisclosed the impact of pending litigations on its financial position;
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.
iv. the disclosure requirement relating to holding as well as dealings in specifiedbank notes were applicable for the period 8 November 2016 to 30 December 2016 which arenot relevant to these standalone financial statements. Hence reporting under this is notapplicable.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Sumesh E S
Membership No.: 206931
Date: 09 May 2018
Annexure A to the Independent Auditor's Report of even date to the members of AccelFrontline Limited on the standalone financial statements for the year ended 31March 2018
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner over a period of 3 years whichin our opinion is reasonable having regard to the size of the Company and the nature ofits assets. In accordance with this program certain fixed assets were verified during theyear and no material discrepancies were noticed on such verification.
(c) The Company does not hold any immovable property (in the nature of 'fixed assets').Accordingly the provisions of clause 3(i) (c) of the Order are not applicable.
(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year except for goods-in-transit and stocks lying withthird parties. For stocks lying with third parties at the year-end written confirmationshave been obtained by the management. No material discrepancies were noticed on theaforesaid verification.
(iii) The Company has granted unsecured loans to companies covered in the registermaintained under Section 189 of the Act; and with respect to the same:
(a) in our opinion the terms and conditions of grant of such loans are not primafacie prejudicial to the company's interest.
(b) the schedules of repayment of the principal and the payment of the interest has notbeen stipulated and hence we are unable to comment as to whether repayments/receipts ofthe principal amount and the interest are regular;
(c) in the absence of stipulated schedule of repayment of principal and payment ofinterest we are unable to comment as to whether there is any amount which isoverdue formore than 90 days and whether reasonable steps have been taken by the Company for recoveryof principal amount and interest.
(iv) In our opinion the Company has complied with the provisions of Sections 185 ofthe Act in respect of loans investments guarantees and security. In our opinion theCompany has complied with the provisions of Section 186 except Section 186 (5) of the Actrelating to prior approval of public financial institutions for loans given to Accel ITResources Limited amounting to INR 538 lakhs which is also the balance as at 31 March2018.
(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products/services andare of the opinion that prima facie the prescribed accounts and records have been madeand maintained. However we have not made a detailed examination of the cost records witha view to determine whether they are accurate or complete.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax goods and service tax duty of customs cess and othermaterial statutory dues as applicable have generally been regularly deposited to theappropriate authorities though there has been a slight delay in a few cases. Further noundisputed amounts payable in respect thereof were outstanding at the year-end for aperiod of more than six months from the date they become payable.
(b) The dues outstanding in respect of income-tax sales-tax service-tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:
|Name of the statute ||Nature of dues ||Amount |
( Rs )
|Amount paid under Protest ( Rs ) Lakhs ||Period to which the amount relates ||Forum where dispute is pending |
|Kerala Value Added Tax Act 2003 ||Tax ||44 ||35 ||2007-08 ||Commissioner of Commercial Taxes |
|Uttar Pradesh Trade Tax Act 1948 ||Tax ||1 ||- ||2002-03 ||Trade Tax Tribunal |
|West Bengal Sales Tax AcT1994 ||Tax ||1 ||- ||2001-02 ||Commercial Tax Officer |
|West Bengal Sales Tax AcT1994 ||Tax and Interest ||2 ||- ||2003-04 and 2004-05 ||Assistant Commissioner |
|Jharkhand Value Added Tax 2005 ||Penalty ||1 ||- ||2007-08 ||Joint Commissioner |
|Kerala Value Added Tax Act 2003 ||Tax ||69 ||21 ||2013-14 and 2014-15 ||Commercial Tax Officer |
|Kerala Value Added Tax Act 2003 ||Tax ||1 ||- ||2015-16 ||Assistant Commissioner (intelligence) |
|Kerala Value Added Tax Act 2003 ||Tax ||47 ||10 ||2011-12 and 2012-13 ||Deputy Commissioner Appeals II |
|Uttar Pradesh Trade Tax Act 1948 ||Tax ||146 ||42 ||2010-11 2011-12 and 2012-13 ||Deputy Commissioner |
|Rajasthan Value Added Tax 2003 ||Tax ||4 ||- ||2011-12 ||Assistant Commissioner |
|Kerala Value Added Tax Act 2003 ||Tax and Penalty ||128 ||- ||2013-14 and 2014-15 ||Deputy Commissioner (Appeals) |
|Customs and Excise Act 1964 ||Tax Interest and Penalty ||411 ||175 ||2014-15 ||cestat |
|Income Tax Act 1961 ||Tax ||844 ||- ||2005-06 to 2007-08 ||High Court |
|Income Tax Act 1961 ||Tax ||327 ||- ||2008-09 ||High Court and CIT Appeals |
|Income Tax Act 1961 ||Tax ||110 ||- ||2010-11 ||High Court |
|Income Tax Act 1961 ||Tax ||121 ||- ||2010-11 ||Assessing Officer |
|Income Tax Act 1961 ||Tax ||248 ||- ||2012-13 ||Commissioner of Income Tax (Appeals) |
(vIII) The Company has not defaulted in repayment of loans or borrowings to anyfinancial institution or a bank during the year. The Company has no borrowings obtainedfrom government and the Company did not have any outstanding debentures during the year.
(Ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments) and did not have any term loans outstanding during theyear. Accordingly the provisions of clause 3(Ix) of the Order are not applicable.
(x) No fraud by the Company or on the company by its officers or employees has beennoticed or reported during the period covered by our audit.
(xI) The Company has not paid or provided for any managerial remuneration. Accordinglythe provisions of Clause 3(xI) of the Order are not applicable.
(xII) In our opinion the Company Is not a Nidhi Company. Accordingly provisions ofclause 3(xII) of the Order are not applicable.
(xIII) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable IndAS.
(xIv) During the year the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.
(xv) In our opinion the company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.
(xvi) The company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Sumesh E S
Membership No.: 206931
Place: Chennai Date: 09 May 2018
Annexure B to the Independent Auditor's Report of even date to the members of AccelFrontline Limited on the standalone financial statements for the year ended 31 March 2018
Independent Auditor's Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ('the Act')
1. In conjunction with our audit of the standalone financial statements of AccelFrontline Limited ('the Company') as at and for the year ended 31 March 2018 we haveaudited the internal financial controls over financial reporting ('IFCoFR') of the Companyas at that date.
Management's Responsibility for Internal Financial Controls
2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal controls over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of the Company's business including adherence to the Company's policies thesafeguarding 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.
3. Our responsibility is to express an opinion on the Company's IFCoFR based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India ('ICAI') and deemed to be prescribed underSection 143(10) of the Act to the extent applicable to an audit of IFCoFR and theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting ('theGuidance Note') issued by the 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 IFCoFR were established and maintained and if suchcontrols operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effectiveness. Our audit of IFCoFR includes obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's IFCoFR.
Meaning of Internal Financial Controls over Financial Reporting
6. A company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation offinancial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sIFCoFR include 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.
GLOBAL IT SERVICES
Inherent Limitations of Internal Financial Controls over Financial Reporting
7. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that the IFCoFR may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
Basis of Qualified Opinion
8. According to the information and explanations given to us and based on our auditthe following material weaknesses have been identified as at 31 March 2018:
The Company did not have an appropriate internal control system towards estimating thevalue in use of its investment in subsidiary to assess the requirement of recognising animpairment loss as laid down under Indian Accounting Standard ('Ind AS') 36 'Impairment ofAssets' which resulted or could have potentially resulted in a material misstatement inthe value of Company's investments provision for impairment and its consequential impacton corresponding earnings and reserves and surplus including applicable disclosures in theCompany's standalone financial statements.
'A 'material weakness' is a deficiency or a combination of deficiencies in IFCoFRsuch that there is a reasonable possibility that a material misstatement of the Company'sannual or interim financial statements will not be prevented or detected on a timelybasis.
9. In our opinion except for the possible effects of the material weakness describedabove on the achievement of the objectives of control criteria the Company has in allmaterial respects adequate internal financial controls over financial reporting and suchinternal financial controls over financial reporting were operating effectively as at 31March 2018 based on the internal control over financial reporting criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued byThe Institute of Chartered Accountants of India.
10. We have considered the material weaknesses identified and reported above indetermining the nature timing and extent of audit tests applied in our audit of thefinancial statements of the Company as at and for the year ended 31 March 2018 and thesematerial weaknesses have affected our opinion on the financial statements of the Companyand we have issued a qualified opinion on the financial statements.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Sumesh E S
Membership No.: 206931
Date: 09 May 2018