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Nucleus Software Exports Ltd.

BSE: 531209 Sector: IT
NSE: NUCLEUS ISIN Code: INE096B01018
BSE 12:37 | 18 Sep 324.45 -6.35
(-1.92%)
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329.90

HIGH

338.20

LOW

324.45

NSE 12:24 | 18 Sep 326.35 -4.90
(-1.48%)
OPEN

325.10

HIGH

333.00

LOW

325.10

OPEN 329.90
PREVIOUS CLOSE 330.80
VOLUME 123
52-Week high 446.50
52-Week low 286.15
P/E 13.34
Mkt Cap.(Rs cr) 942
Buy Price 326.30
Buy Qty 10.00
Sell Price 328.45
Sell Qty 5.00
OPEN 329.90
CLOSE 330.80
VOLUME 123
52-Week high 446.50
52-Week low 286.15
P/E 13.34
Mkt Cap.(Rs cr) 942
Buy Price 326.30
Buy Qty 10.00
Sell Price 328.45
Sell Qty 5.00

Nucleus Software Exports Ltd. (NUCLEUS) - Auditors Report

Company auditors report

To the Members of Nucleus Software Exports Limited Report on the Audit of theStandalone Financial Statements Opinion

We have audited the standalone financial statements of Nucleus Software Exports Limited("the Company") which comprise the standalone balance sheet as at 31 March2019 and the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary of the significant accounting policies and other explanatory 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 2019 and profit and other comprehensiveincome 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.

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

Significant Judgments requirement in estimating percentage of work completed in fixedprice contracts See note 1.2.i (e) to the standalone financial statements

The key audit matter How the matter was addressed in our audit
Revenue from fixed price contracts for sale of license and related customization and implementation is recognized in accordance with the percentage completion method calculated based on output method. For the year ended 31 March 2019 revenue amounting to ' 39676 lacs has been recognized respectively from the sale of software products and rendering of services to the customers. The revenue on fixed price contract is recognized based on the percentage of work completed which is estimated by the Company basis the completion of milestones and activities as agreed with the customers. Due to large variety and complexity of activities performed significant judgments are required to estimate percentage of completion. Therefore the audit risk is that if there is an error in estimation of percentage of completion this will have an impact on the accuracy of revenue recognized for the year ended 31 March 2019. 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:
Obtaining an understanding of key internal controls over recording of activities completed and of general IT controls for the project management tool. We documented the controls and made assessment of the effectiveness of their design. We also performed walk through tests to assess whether the controls were operating as designed.
Involving independent IT specialists to assess whether the project management tool captured activities completed in the correct period and whether the related percentage completion were derived from a system that is operating effectively.
Selecting a sample of contracts using a mix of quantitative and qualitative criteria and performing the following procedures for each contract selected:
inspecting key terms including transaction price deliverables performance obligations timetable and milestones set out in the contract;
inquiring of the relevant project managers about key aspects and the progress of the contracts including the estimated total contract costs key project risks amendments contingencies and billing schedules;
checking project management tool for budgeted efforts and related percentage completion milestones and establishing accuracy of milestones based on actualization of efforts for delivered projects and past data;
checking the details of the activities completed with those stated in the customer contract details of activities completed as provided by the project manager including agreeing the respective activities performed according to project management tool with customer report/confirmation which forms the basis of percentage of completion;

Significant Judgments requirement in estimating percentage of work completed in fixedprice contracts See note 1.2.i (e) to the standalone financial statements

The key audit matter How the matter was addressed in our audit testing the sample to underlying invoices to customer and cash receipts from customers; and
Performing ageing analysis and analytical procedures based on revenue trends to assess the movements in the accrual.

Information Other than the Standalone Financial Statements and Auditors' Report Thereon

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 financial statements and our auditors' reportthereon.

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 Responsibility for the Standalone Financial Statements

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 changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe 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 the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible 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.

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

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 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 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 made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting 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

in the standalone 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 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.

Report on Other Legal and Regulatory Requirements

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

(A) As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the 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) the standalone statement

of changes in equity and the standalone statement of cash flows dealt with by thisReport are in agreement with the books 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 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 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 tofinancial statements of the Company and the operating effectiveness of such controlsrefer 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 2019 onits financial position in its standalone financial statements - Refer Note 2.32 to thestandalone financial statements;

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 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 financial statements since they do not pertain to thefinancial year ended 31 March 2019.

(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 Registration No.: 116231W/W-100024

Sd/-

Manish Gupta

Partner

Membership No: 095037

Noida

23 April 2019

Annexure A referred to in our Independent Auditors' Report to the members of NucleusSoftware Exports Limited on the standalone financial statements for the year ended 31March 2019.

(i) (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 each year. In accordance with this programme all thefixed assets were physically verified during the year. In our opinion the periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its assets. As informed to us the discrepancies observed on physicalverification were not material and have been properly dealt with in the books of account.

(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 comprising all the immovableproperties of land and buildings which are freehold are held in the name of the Companyas at the balance sheet date. In respect of immovable properties of land and buildingsthat have been taken on lease and disclosed as fixed asset in the standalone financialstatements the lease agreements are in the name of the Company where the Company is thelessee in the agreement.

(ii) The Company is in the business of rendering services and as such does not hold anyinventory. Therefore the provisions of paragraph 3 (ii) of the Order are not applicableto the Company.

(iii) The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Act. Therefore the provisions of paragraph 3 (iii) of the Order arenot applicable to the Company.

(iv) According to information and explanations given to us and based on auditprocedures performed the Company has complied with the provisions of Sections 185 and 186of the Act in respect of grant of loans making investments and providing guarantees andsecurities as applicable.

(v) As per the information and explanations given to us the Company has not acceptedany deposits from the public within the meaning of the directives issued by the ReserveBank of India provisions of section 73 to 76 of the Act any other relevant provisions ofthe Act and the relevant rules framed thereunder.

(vi) According to the information and explanations given to us the Central Governmenthas not prescribed the maintenance of cost records under section 148(1) of the Act forany of the services rendered by the Company. Therefore the provisions of paragraph 3(vi)of the Order are not applicable to the Company.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Employees' StateInsurance Income-tax Goods and Services tax Duty of customs Cess and other materialstatutory dues have generally been regularly deposited during the year by the Company withthe appropriate authorities.

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 31 March 2019 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us there are no disputeddues in respect of Sales tax Service tax Goods and Services tax Duty of customs Dutyof excise and Value added tax which have not been deposited with the appropriateauthorities. The following dues of Income tax have not been deposited with the appropriateauthorities on account of disputes:

Name of the statute Nature of dues Forum where the dispute is pending Amount Year to which the amount relates
in Rs. Lacs
Income Tax Act 1961 Income Tax Income Tax Appellate Tribunal (ITAT) 11* AY 2015-16
Income Tax Act 1961 Income Tax Commissioner of Income Tax (Appeals) [CIT (Appeals)] 19* AY 2016-17

* The amount represent the payment made under protest or adjustment against refund

(viii) In our opinion and according to the information and explanations given to usthere are no loans or borrowing from a financial institution bank government or dues todebenture holders during the year. Therefore the provisions of paragraph 3 (viii) of theOrder are not applicable to the Company.

(ix) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. The Company has not taken anyterm loans during the year.

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

(xi) In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us the Company is not 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 the 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 and based on auditprocedures performed the Company has

not entered into any non-cash transactions with directors or persons connected withthem. Accordingly paragraph 3(xv) of the Order is not applicable.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.Accordingly paragraph 3(xvi) of the Order is not applicable.

For B S R & Associates LLP

Chartered Accountants Firm Registration No.: 116231W/W-100024

Sd/-

Manish Gupta

Partner

Membership No.: 095037

Noida

23 April 2019

Annexure B to the Independent Auditors' report on the Standalone Financial Statementsof Nucleus Software Exports Limited for the year ended 31 March 2019.

Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Subsection 3 of Section 143 of the Companies Act2013

(Referred to in paragraph 1(A)(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference to financial statementsof Nucleus Software Exports Limited ("the Company") as of 31 March 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2019 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants 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 financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. 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 safeguarding ofits 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 (hereinafter referred to as"the Act").

Auditors' Responsibility

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 prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit

of internal financial controls with reference to financial statements includedobtaining an understanding of such internal financial controls assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the standalone 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 withreference to financial statements.

Meaning of Internal Financial controls with Reference to Financial Statements

A company's internal financial controls with reference to financial statements is 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 controlswith reference to financial statements include those policies 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 statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

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 controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

For B S R & Associates LLP

Chartered Accountants Firm Registration No.: 116231W/W-100024

Sd/-

Manish Gupta

Partner

Membership No.: 095037

Noida

23 April 2019