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Megasoft Ltd.

BSE: 532408 Sector: IT
NSE: MEGASOFT ISIN Code: INE933B01012
BSE 12:42 | 19 Oct 18.10 -0.20
(-1.09%)
OPEN

18.70

HIGH

18.70

LOW

17.55

NSE 12:34 | 19 Oct 18.10 -0.25
(-1.36%)
OPEN

18.75

HIGH

18.85

LOW

17.80

OPEN 18.70
PREVIOUS CLOSE 18.30
VOLUME 43023
52-Week high 22.45
52-Week low 6.15
P/E 51.71
Mkt Cap.(Rs cr) 134
Buy Price 18.05
Buy Qty 1099.00
Sell Price 18.25
Sell Qty 1324.00
OPEN 18.70
CLOSE 18.30
VOLUME 43023
52-Week high 22.45
52-Week low 6.15
P/E 51.71
Mkt Cap.(Rs cr) 134
Buy Price 18.05
Buy Qty 1099.00
Sell Price 18.25
Sell Qty 1324.00

Megasoft Ltd. (MEGASOFT) - Auditors Report

Company auditors report

To the Members of Megasoft Limited

Report on the Audit of the Standalone Ind AS Financial Statements

1. Opinion

We have audited the Standalone Ind AS Financial Statements of MEGASOFTLIMITED ("the Company") which comprise the balance sheet as at 31st March2021 and the Statement of Profit and Loss (including the Statement of OtherComprehensive Income) the Cash flow Statement notes to Standalone Ind AS FinancialStatements and the Statement of Changes in Equity for the year then ended and a summaryof significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Standalone Ind AS 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 of the state ofaffairs of the Company as at March 31 2021 and profit (changes in equity) and its cashflows for the year ended on that date.

2. Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Companies Act 2013.

Our responsibilities under those Standards are further described in theAuditor's Responsibilities for the Audit of the Standalone Ind AS FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the Standalone Ind AS FinancialStatements under the provisions of the Companies Act 2013 and the Rules thereunder andwe have 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.

3. Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Standalone Ind AS Financial Statements ofthe current period. These matters were addressed in the context of our audit of theStandalone Ind AS Financial Statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. We have determined the mattersdescribed below to be the key audit matters to be communicated in our report.

S.No Key Audit Matter Auditor's Response
We assessed the Company's process and policy to identify the impact of adoption of Ind AS 115. Our audit approach consisted testing of the design and operative effectiveness of internal controls and substantive testing as follows:
1 Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers":
Evaluated the process relating to implementation of the new revenue accounting standard.
The application of the Ind AS 115 involves certain key judgements relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognized over a period. Hence under Ind AS 115 revenue should be recognized when an entity transfers control of a good or service to a customer. A customer obtains control when it has the ability to direct the use of and obtain the benefits from the good or service.
Selected a sample of continuing and new contracts relating to identification of the distinct performance obligations and we carried out a combination of procedures involving observation and inspection of evidence in this regard.
Identified the distinct performance obligations in these contracts.
Compared these performance obligations with that identified and recorded by the Company.
Accordingly the Company has not recognized revenue for sales initiated in the current year for which physical delivery of goods has happened in the next financial year.
Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings.
2 Evaluation of uncertain tax positions: We obtained the list of legal cases filed by and on the Company.
The Company has uncertain tax and legal positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. Refer "Contingent Liability and Data for Notes on accounts" annexure.
We obtained details of completed tax assessments and demands for the year ended March 31 2021 from management.
We also reviewed Company's correspondences and appeal documents.
We obtained status reports from the existing counsels handling each case.
Ascertained whether the chances of crystallization of liability are probable/ possible/ remote.
Ensured appropriate disclosure under Notes on accounts.

4. Information Other than the Financial Statements andAuditor's Report thereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Board'sreport including Annexure to Board's Report Business Responsibility Report CorporateGovernance and Shareholder's Information but doesn't include the Standalone IndAS Financial Statements and our auditor's report thereon.

Our opinion on the Standalone Ind AS Financial Statements does notcover the other information and we do not express any form of assurance conclusionthereon.

In connection with our audit of the Standalone Ind AS FinancialStatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the Standalone Ind ASFinancial Statements or our knowledge obtained in the course of our audit or otherwiseappears to be materially misstated. If based on the work we have performed we concludethat there is a material misstatement of this other information; we are required to reportthat fact. We have nothing to report in this regard.

5. Management's Responsibility for the Standalone Ind ASFinancial Statements

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these Standalone Ind AS Financial Statements that give a true and fairview of the financial position financial performance (changes in equity) and cash flowsof the Company in accordance with the accounting principles generally accepted in Indiaincluding the accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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 financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the Standalone Ind AS Financial Statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing theCompany's financial reporting process.

6. Auditor's Responsibilities for the Audit of theStandalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether theStandalone Ind AS Financial Statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Standalone Ind AS FinancialStatements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

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

• Conclude on the appropriateness of management's use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the Standalone Ind AS Financial Statements or if such disclosuresare inadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the Standalone IndAS Financial Statements including the disclosures and whether the Standalone Ind ASFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

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

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the Standalone IndAS Financial Statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

7. 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 subsection(11) of section 143 of the Companies Act 2013 we give in the Annexure-A astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.

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 the statement ofOther Comprehensive Income) the Cash flow Statement notes to Standalone Ind AS FinancialStatements and the Statement of Changes in Equity dealt with by this Report are inagreement with the books of account.

(d) In our opinion the aforesaid Standalone Ind AS Financial Statements comply withthe Indian Accounting Standards specified under Section 133 of the Act read withCompanies (Indian Accounting Standards) Rules 2015 as amended.

(e) On the basis of the written representations received from the directors as on 31stMarch2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in terms of Section164 (2) of the Act.

(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".

(g) With respect to the matter to be included in the Auditors' Report underSection 197(16) of the Act in our opinion and according to the information andexplanations given to us the remuneration paid by the Company to its directors during thecurrent year is in accordance 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 litigation on its financial positionin its Standalone Ind AS Financial Statements Refer Note no. 26 to the FinancialStatements.

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 toInvestor Education and Protection Fund by the Company.

For N.C. Rajagopal & Co.
Chartered Accountants.
Firm Reg No : 003398S
Arjun S
Place: Chennai (Partner)
Date: 05th May 2021 Membership No. 230448
UDIN: 21230448AAAACO3424

ANNEXURE - A TO THE AUDITOR'S REPORT

(Referred to in Para 7 of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.

(b) The Company has a regular programme of physical verification of its property plantand equipment whereby property plant and equipment are verified in a phased manner over aperiod of three years. In accordance with this programme certain property plant andequipment were verified during the year and no material discrepancies were noticed on suchverification. This periodicity of physical verification is reasonable having regard to thesize of the company and the nature of its assets.

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

(ii) The Company is a service company primarily rendering software services.Accordingly it does not have any inventory. Thus paragraph 3(ii) of the Order is notapplicable to the Company.

(iii) According to the information and explanations given to us the Company has notgranted any loans except to its wholly owned subsidiary. The repayments are on demand andthe terms are not prejudicial to the Company's interest. There are no overdue amountson the loans granted to the wholly owned subsidiary.

(iv) In our opinion and according to the information and explanations given to us thecompany has not granted any loans made any investments or provided any guarantee orsecurity as envisaged under Section 185 and Section 186 of the Companies Act 2013respectively.

(v) The company has not accepted deposits from the public as per the provisions ofsections 73 to 76 or any other relevant provisions of the Companies Act 2013 and hencereporting under this clause does not arise.

(vi) As per the information and explanations given to us the Central Government hasnot prescribed maintenance of cost records under section 148(1) of the Act.

(vii) (a) During the Financial Year there have been delays by the Company indepositing undisputed statutory dues as applicable to it to the appropriate authorities.

There are no arrears of outstanding statutory dues beyond the period mentioned inclause vii (a) of the Order as at the balance sheet date except for Tax deducted at Sourceof Rs.41.18 lakhs.

(b) According to the information and explanations given to us following are thedisputed dues payable in respect of Income Tax as on 31st March 2021: (1) Income tax andInterest amounting to Rs 379.71 lakhs pertaining to the Assessment Year 2012-13(FY2011-12) is pending before the ITAT of which an amount of Rs. 40.00 Lakhs has beendeposited with the Income Tax Department during the previous year. (2) Income tax andInterest amounting to Rs 248.38 lakhs pertaining to the Assessment Year 2013-14(FY2012-13) is pending before the CIT Appeals. (3) Tax deducted at Source amounting to Rs17.79 lakhs for Assessment Years 2014-15 to 2017-18 (FY 2013-14 to 2016-17) is pending atthe TDS Circle.

(viii) As per the information and records produced and verified by us the company hasnot defaulted in repayment of dues to Banks or Financial institutions. The company has notraised money by way of debentures and does not have any dues to government.

(ix) According to the information and explanation given to us the company has notraised money by way of initial public offer or further public offer or term loans duringthe year.

(x) During the course of our examination of the books of account carried out inaccordance with the generally accepted auditing practices in India we have neither comeacross any instance of fraud by the company nor any fraud on the Company by its officersor employees during the year.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanation given to us thecompany is not a Nidhi Company as prescribed under Section 406 of the Act. Hence reportingunder this clause does not arise.

(xiii) According to the information and explanation given to us the transactions withthe related parties are in compliance with section 177 and 188 of the Companies Act 2013and the details have been disclosed in the Standalone Ind AS Financial Statements asrequired by the applicable accounting standards.

(xiv) According to the information and explanation given to us and based on ourexamination of the records of the company the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(xv) According to the information and explanation given to us and based on ourexamination of the records of the company the company has not entered into any non cashtransactions with directors or person connected with him as referred to in section 192 ofCompanies Act 2013.

(xvi) According to the information and explanation given to us the company is notrequired to be registered under section 45-IA of Reserve Bank of India Act 1934. Hencereporting under this clause does not arise.

For N.C. Rajagopal & Co.
Chartered Accountants.
Firm Reg No : 003398S
Arjun S
Place: Chennai (Partner)
Date: 05th May 2021 Membership No. 230448
UDIN: 21230448AAAACO3424

ANNEXURE - B TO THE AUDITORS' REPORT ON THE INTERNAL FINANCIALCONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013("THE ACT")

We have audited the internal financial controls over financialreporting of Megasoft Limited ("the Company") as of March 31 2021 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting 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 its business including adherence to company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial control system over financial reporting and theiroperating effectiveness.

Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the standalone Ind AS financial statements whether dueto fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Ind AS financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internalfinancial control over financial reporting 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 Ind AS financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance 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 havea material effect on the Ind AS financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2021 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For N.C. Rajagopal & Co.
Chartered Accountants.
Firm Reg No : 003398S
Arjun S
Place: Chennai (Partner)
Date: 05th May 2021 Membership No. 230448
UDIN: 21230448AAAACO3424

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