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Newgen Software Technologies Ltd.

BSE: 540900 Sector: IT
NSE: NEWGEN ISIN Code: INE619B01017
BSE 00:00 | 23 Apr 311.30 -1.60
(-0.51%)
OPEN

319.95

HIGH

319.95

LOW

310.85

NSE 00:00 | 23 Apr 311.10 -1.30
(-0.42%)
OPEN

313.90

HIGH

319.35

LOW

310.10

OPEN 319.95
PREVIOUS CLOSE 312.90
VOLUME 10898
52-Week high 340.95
52-Week low 114.20
P/E 20.78
Mkt Cap.(Rs cr) 2,178
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 319.95
CLOSE 312.90
VOLUME 10898
52-Week high 340.95
52-Week low 114.20
P/E 20.78
Mkt Cap.(Rs cr) 2,178
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Newgen Software Technologies Ltd. (NEWGEN) - Auditors Report

Company auditors report

To

The Members

Newgen Software Technologies Limited

Report on the Audit of the Standalone Financial Statements

OPINION

We have audited the standalone financial statements of Newgen Software TechnologiesLimited ("the Company") which comprise the Standalone Balance Sheet as at31 March 2020 and the Standalone Statement of Profit and Loss (including othercomprehensive income (loss)) Standalone Statement of Changes in Equity and StandaloneStatement of Cash Flows for the year then ended and notes to the standalone financialstatements including a summary of the significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2020 and profit and other comprehensiveincome (loss) 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) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone 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 financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the standalone 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 financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

DESCRIPTION OF KEY AUDIT MATTER

Revenue from operations (refer note 27 to the standalone financial statements)

The key audit matter How the matter was addressed in our audit
Revenue relating to implementation services from fixed price contracts is recognised based on percentage of completion method which is estimated by the Company basis the completion of milestones and activities agreed with the customers. Due to complexity and volume of transactions significant judgements are required to estimate percentage of completion and determine timing and accuracy of recognition of revenue. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
• Evaluated the design and implementation of internal controls and tested the operating effectiveness of internal controls relating to determination of percentage of completion and estimation of efforts required to complete the performance obligation;
• Involved specialists to assess the design implementation and operating effectiveness of key IT controls over the IT environment in which the business systems operate and to test information technology system controls used in recording revenue.
• Selected specific/statistical samples of existing and new contracts and performed the following procedures:
• Inspected key terms including price deliverables timetable and milestones set out in the contract for selected sample of contracts and identified the distinct performance obligations.
• Tested project management tool for budgeted efforts and related percentage completion milestones and establishing accuracy of milestones based on actualisation of efforts for delivered projects.
• Tested the details of activities completed with those stated in the customer contract details of activities completed as provided by the project head and confirmation/acceptance of completion of such activities by the customer.
Trade receivables (refer note 12 to the standalone financial statements)
The key audit matter How the matter was addressed in our audit
Significant management judgement in determining the recoverable amount of trade receivables as estimating the recoverable amount involves inherent uncertainty. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
• Obtained an understanding of and assessed the design and implementation of Company's key internal controls relating to debt collection and making provision for doubtful debts;
• Assessed on a sample basis that items in the receivables' ageing report were classified within the correct ageing bracket by comparing individual items in the report with underlying documentation which included sales invoices proof of delivery and customers sign offs;
• Assessed the assumptions and estimates made by the Company for the provision for doubtful debts with reference to our understanding of the debtors' financial condition the industry in which the debtors are operating the ageing of overdue balances and historical and post year-end cash receipts from the debtors and by performed a retrospective analysis of the historical accuracy of these estimates; and
• Tested the accuracy and completeness of underlying data for "expected credit loss model".

OTHER INFORMATION

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

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

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

MANAGEMENT'S AND BOARD OF DIRECTORS' RESPONSIBILITY FOR THE STANDALONE FINANCIALSTATEMENTS

The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss and othercomprehensive income (loss) changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the standalone financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements the Management and Board of Directorsare responsible 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 the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financialreporting process.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the standalonefinancial 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 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 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 standalonefinancial 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 Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures in the standalone financial statementsmade by the Management and Board of Directors.

• Conclude on the appropriateness of the Management and Board of Directors use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate 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 conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

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 financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

REPORTON 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 Order to the extentapplicable.

2. (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 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 Standalone Balance Sheet the Standalone Statement of Profit and Loss (includingother comprehensive income (loss)) the Standalone Statement of Changes in Equity and theStandalone Statement of Cash Flows dealt with by this Report are in agreement with thebooks of account.

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

e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 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 with reference tostandalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".

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

i. The Company has disclosed the impact of pending litigations as at 31 March 2020 onits financial position in its standalone financial statements - Refer Note 36 to thestandalone financial statements;

ii. The Company did not have any long-term contracts including derivative contracts 3and 4 of the for which there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these standalone financial statements since they do not pertainto the financial year ended 31 March 2020.

(C) With respect to the matter to be included in the Auditors' Report under section197(16):

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

For B S R & ASSOCIATES LLP
Chartered Accountants
Firm's Registration No.
116231W/W-100024
Rakesh Dewan
Partner
Place: Gurugram Membership No. 092212
Date: 26 May 2020 UDIN: 20092212AAAABM8147

Annexure A referred to in our independent auditors' report to the members of NewgenSoftware Technologies Limited on the standalone financial statements for the year ended 31March 2020 we 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 assets bywhich all fixed assets are verified in a phased manner over a period of two years. Inaccordance with this programme fixed assets at certain locations were verified during theyear. In our opinion this periodicity of physical verification is reasonable havingregard to the size of the Company and the nature of its assets. As informed to us nomaterial discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds and lease deeds of theimmovable properties are held in the name of the Company.

(ii) The Company is a service company primarily engaged in the business of softwareproduct development including designing and delivering end-to-end software solutionscovering the entire spectrum of software services from workflow automation to documentmanagement to imaging. Accordingly it does not hold any physical inventories at the endof the year. Thus paragraph 3(ii) of the Order is not applicable.

(iii) The Company has not granted any loans secured or unsecured to Companieslimited liability partnerships firms or other parties covered in the register requiredunder section 189 of the Companies Act 2013. Accordingly para 3(iii) of the Order is notapplicable.

(iv) According to the information and explanations given to us the Company has notgiven any loan guarantee and security as specified under section 185 and 186 of theCompanies Act 2013.

Further the investment made by the Company is in compliance with section 186 of theCompanies Act 2013.

(v) As per the information and explanations given to us the Company has not acceptedany deposits as mentioned in the directives issued by the Reserve Bank of India and theprovisions of section 73 to 76 or any other relevant provisions of the Act and the rulesframed there under.

(vi) The Central Government has not prescribed the maintenance of cost records undersub section (1) of section 148 of the Companies Act 2013 for any of the activitiescarried out by the Company.

(vii) (a) According to the information and explanation given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect by the of undisputed management statutory dues including ProvidentFund Employees' State Insurance Income- tax Goods and Service tax Duty of customsCess and other material statutory dues have been regularly deposited during the year bythe Company with the appropriate authorities. As explained to us the Company did not haveany dues on account of Duty of excise Sales tax Service tax and Value added tax.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees' State Insurance Income-tax Goods andService tax Duty of customs Cess and other material statutory dues were in arrears as at31 March 2020 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 inrespect of Income tax Goods and Service tax and Duty of customs which have not beendeposited with the appropriate authorities on account of any dispute. As explained abovethe Company did not have any dues on account of Duty of excise Sales tax Service tax andValue added tax.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans/borrowings to banks. Further therewere no dues payable to financial institutions government or debenture holders during theyear or outstanding as at 31 March 2020.

(ix) The Company has not raised any money by way of initial public offer during theyear. However the Company had raised money by way of initial public offer during the year2017-18. The proceeds from IPO were Rs. 8150.85 Lacs (net of issue related expenses).

Details of utilization of IPO Proceeds is as follows:

Particulars Net proceeds Utilized upto 31 March 2020 Amount unutilized upto March 31 2020
(In Rs Lacs) (In Rs Lacs) (In Rs Lacs)
Purchase and furnishing of office premises near Noida-Greater Noida Expressway Uttar Pradesh and general corporate expenses 8150.85 8150.85 Nil
Total 8150.85 8150.85 Nil

The Company has not raised money by way of further public offer (including debtinstruments) or term loans during the year.

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

(xi) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company managerial remuneration has been paid/providedby the Company in accordance with provisions of section 197 read with Schedule V of theCompanies Act 2013.

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

(xiii) According to the information and explanations given to us and on the basis ofour examination of the records of the Company there are no transactions with relatedparties which are not in compliance with Section 177 and 188 of the Companies Act 2013and the details have been disclosed in the standalone financial statements as requiredby the applicable accounting standards.

(xiv) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the Company has not made any preferentialallotment private placement of shares and fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable.

(xv) According to information and explanations given to us the Company has not enteredinto any non-cash transactions with directors or persons connected with them. Accordinglyparagraph 3(xv) of the Order is not applicable.

For B S R & ASSOCIATES LLP
Chartered Accountants
Firm's Registration No.
116231W/W-100024
Rakesh Dewan
Partner
Place: Gurugram Membership No. 092212
Date: 26 May 2020 UDIN: 20092212AAAABM8147

Annexure B to the Independent Auditors' report on the standalone financial statementsof Newgen Software Technologies Limited for the year ended 31 March 2020

Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 (referred to in paragraph 2(a)(f) under ‘report on Other Legal andregulatory requirements' section of our report of even date)

OPINION

We have audited the internal financial controls with reference to standalone financialstatements of Newgen Software Technologies Limited ("the Company") as of 31March 2020 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone financial statements and such internal financialcontrols with reference to standalone financial statements were operating effectively asat 31 March 2020 based on the internal financial controls with reference to financialstatements 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 (the"Guidance Note").

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to 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 Companies Act 2013 (hereinafterreferred to as "the Act").

AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to standalone financial statements. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to standalone financial statements were established andmaintained and whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of such internalfinancial controls assessing the risk that a material weakness exists and testing andevaluating 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 standalone financial statementswhether 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 withreference to standalone financial statements.

MEANING OF INTERNAL FINANCIAL CONTROLS WITHR EFERENCE TO STANDALONE FINANCIALSTATEMENTS

A company's internal financial controls with reference to standalone financial toprovide reasonable assurance regarding the reliability of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sinternal financial controls with reference to standalone financial and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial 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.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITHR EFERENCE TO STANDALONEFINANCIAL STATEMENTS

Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

For B S R & ASSOCIATES LLP
Chartered Accountants
Firm's Registration No. 116231W/W-100024
Rakesh Dewan
Partner
Place: Gurugram Membership No. 092212
Date: 26 May 2020 UDIN: 20092212AAAABM8147

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