To the Members of Quest Softech (India) Limited
Report on the Audit of the Financial Statements
1. We have audited the accompanying financial statements of Quest Softech (India)Limited ("the Company") which comprise the Balance Sheet as at 31stMarch 2021 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year then endedand notes to the financial statements including a summary of significant accountingpolicies and other explanatory information (hereinafter referred to as "the financialstatements")
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2021 the loss and the totalcomprehensive loss changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
2. We conducted our audit of the financial statements in accordance with the Standardson Auditing ("SAs") specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India ("ICAI") together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our opinion on the financial statements.
Emphasis of Matter
3. We draw attention to Notes no. 18 to the Financial Statements regarding theManagement's internal assessment of recoverability of advances and based on the same thecompany has provided for impairment loss allowances of Rs.396.84 lakhs in current year inrespect of advances which were due but not received.
Our opinion is not modified in respect of this matter.
Key Audit Matters
4. Key Audit Matters (KAM') are those matters that in our professionaljudgement were of most significance in our audit of the financial statements of thecurrent year. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe Key Audit Matters to be communicated in our report.
|Key Audit Matter ||Auditors' Response |
|Recoverability of Deferred Tax Assets ||Principal Audit Procedures: |
|The deferred tax assets recognized include temporary differences associated with carried forward losses of Rs. 22.31 lakhs and unabsorbed depreciation of Rs. 146.13 lakhs. The recognition of deferred tax assets involves judgement regarding the likelihood of the realization of these assets in particular whether there will be sufficient taxable profits in future periods that support the recognition of these assets. ||We reviewed the existing process of the Company to identify the impact of adoption of the Ind AS 12. Our audit procedure included the following: |
|Given the degree of judgement involved in considering these deferred tax assets as recoverable or otherwise we considered this to be the key audit matter. || Our procedures included obtaining an understanding of the process and testing the controls over preparation of the taxable profit forecast. |
|As described in Note 5 of the financial statements as at 31st March 2021 net deferred tax assets recognized were Rs. 42.72 lakhs. || We performed procedures to test the inputs and assumptions used in the taxable profit forecast against historical performance economic and industry indicators publicly available information and including strategic plans. |
|External Confirmations: ||Our audit procedures included among others the following: |
|This matter is considered to be the key audit matter given the circumstances of the year- end confirmations under COVID-19 vis-a-vis non-COVID-19 scenario. || Revised the assessed risk and modified our audit procedures to mitigate these risks; |
|COVID-19 has impacted the procedure of external confirmation request to vendors and customers at the year-end and therefore external confirmation request was sent through electronic mode by the Company. || Obtained reasonable assurance pertaining to transactions with confirming parties for accurate and complete process of routine and significant classes of transactions such as revenue purchases etc.; |
|In view of this we have performed alternative audit procedures. || Selected samples and tested the effectiveness of controls related to accuracy and completeness of transactions in totality considering the frequency and regularity of transactions; |
|Refer Note 7 to the Financial Statements.as at 31st March 2021 || Obtained representations from the management regarding any impairment in the receivables |
|Allowance for credit losses ||Our audit procedures related to the allowance for credit losses for trade receivables included the following among others: |
|The Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The ||We tested the effectiveness of controls over the |
|Company considered current and anticipated future economic conditions relating to industries the Company deals with and the geographical location where it operates. ||(1) development of the methodology for the allowance for credit losses including consideration of the current and estimated future economic conditions |
|In calculating expected credit loss the Company has also considered credit reports and other related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID-19. ||(2) completeness and accuracy of information used in the estimation of probability of default and |
| ||(3) Computation of the allowance for credit losses. |
|We identified allowance for credit losses as a key audit matter because the Company exercises significant judgment in calculating the expected credit losses. ||For a sample of customers: |
|Refer Note 18 to the financial statements as at 31st March 2021 ||We tested the input data such as credit reports and other credit related information used in estimating the probability of default by comparing them to external and internal sources of information. |
| ||We tested the mathematical accuracy and computation of the allowances by using the same input data used by the Company. |
Information Other than the Financial Statements and Auditor's Report Thereon
5. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's Report including annexuresto Board's Report and Shareholder's information but does not include the financialstatements and our auditors' report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
6. In connection with our audit of the financial statements our responsibility is toread the other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.
If based on the work we have performed on the other information obtained prior todate of this audit report 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 Responsibilities for the Financial Statements
7. The Company's management and Board of Directors are responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these financialstatements
that give a true and fair view of the financial position financial performance(including other comprehensive income) changes in equity and cash flows of the Company inaccordance with the Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
8. In preparing the 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.
The Board of Directors are also responsible for overseeing the company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
9. Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
The description of the auditor's responsibilities for the audit of the financialstatements is given in "Appendix I" to this report.
Report on Other Legal and Regulatory Requirements
10. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
11. As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
c) The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveLoss) Statement of Changes in Equity and Statement of Cash Flows dealt with by this Reportare in agreement with the books of account;
d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended;
e) On the basis of the written representations received from the directors as on 31stMarch 2021 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 termsof Section 164(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". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the internal financial control overfinancial reporting of the company.
g) In our opinion and to the best of our information and according to the explanationsgiven to us the company has paid remuneration to its directors during the year is withinthe limit laid down in 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company did not have any pending litigations which have impact on its financialposition in its financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts required to be transferred to the Investor Education andProtection Fund by the Company.
|For C K S P AND CO LLP |
|Chartered Accountants |
|FRN: 131228W/W100044 |
|Kalpen Chokshi |
|UDIN: 21135047AAAAFF9062 |
|Place: Mumbai |
|Date : 29th June 2021 |
APPENDIX - I: THE FURTHER DESCRIPTION OF THE AUDITOR'S RESPONSIBILITIES FOR THE AUDITOF THE 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
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 system with reference to financial statements inplace and the 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 auditors' report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent year and are therefore the key audit matters. We describe these matters in ourauditors' report unless law or regulation precludes public disclosure about the matter orwhen 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.
ANNEXURE A TO INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 10 under Report on Other Legal and RegulatoryRequirements' section of our report of even date to the members of Quest Softech (India)Limited ("the Company") on the financial statements for the year ended 31stMarch 2021.)
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 we report that:
i. In respect of its fixed assets:
(a) The Company does not have any Fixed assets. Hence clause 3 (i) (a) and (b) of theOrder are not applicable to the Company.
(b) The Company does not hold any immovable properties in its name. Hence clause3(i)(c) of the Order is not applicable to the Company.
ii. As the Company does not have inventories the clause 3 (ii) of the Order is notapplicable.
iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to Companies Firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013 ("the Act"). Accordingly clause 3(iii) (a) to (c) are notapplicable to the Company.
iv. According to the information and explanations given to us there are no loansinvestments guarantees and security covered by the provisions of Section 185 and 186 ofthe Act.
v. The Company has not accepted any public deposits within the meaning of Section 73 to76 of the Act and rules framed there-under. We are informed that no order has been passedby the Company Law Board or Reserve Bank of India or any Court or any other Tribunal.Accordingly paragraph 3(v) of the Order is not applicable to the Company.
vi. According to the information and explanations given to us the Company has notundertaken manufacturing activity during the current year. Hence the clause 3(vi) of theOrder regarding maintenance of cost records under Section 148(1) of the Act is notapplicable to the Company.
vii. (a) In our opinion and according to the information and explanations given to usthe
Company has generally been regular in depositing applicable undisputed statutory duesincluding provident fund employees' state insurance income tax sales tax wealth taxservice tax custom duty duty of excise value added tax cess goods and service tax andany other statutory dues to the appropriate authorities during the year.
(b) According to the records of the Company and representation made available to us bythe Company there are no dues of income tax or sales tax or wealth tax or service tax orduty of customs or duty of excise or value added tax or goods service tax which have notbeen deposited on account of any dispute.
viii. In our opinion and according to the information and explanations given to usthe Company has not borrowed any money from financial institutions banks or debentureholders. Accordingly the provisions of clause 3(viii) of the Order is not applicable tothe Company.
ix. In our opinion and according to the information and explanation given to us theCompany has not raised money by way of initial public offer or further public offer(including debt instruments) during the year.
x. According to the information and explanations given to us and to the best of ourknowledge no material fraud by the Company or on the Company by its officers or employeeshas been noticed or reported during the year
xi. As per the information and explanation given to us managerial remuneration hasbeen paid in accordance with the requisite approvals mandate by the provision of Section197 read with schedule V to the Companies Act 2013.
xii. According to information and explanations given to us the Company is not a NidhiCompany as prescribed under Section 406 of the Act. Accordingly paragraph 3(xii) of theOrder is not applicable to the Company.
xiii. According to information and explanations given to us all transactions with therelated parties are in compliance with Sections 177 and 188 of the Act where applicableand the details of such transactions have been disclosed in the financial statements asrequired by the applicable Indian accounting standards.
xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review and hence reportingunder paragraph 3 (xiv) of the Order is not applicable to the Company.
xv. According to information and explanations given to us the Company has not enteredinto any non-cash transactions with directors or persons connected with him and henceclause 3(xv) of the Order is not applicable to the Company
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
ANNEXURE - B TO INDEPENDENT AUDITORS' REPORT
(Referred to in Para 11 (f) of Report on Other Legal and Regulatory Requirements'section of our Independent Auditor's Report of even date to the members of Quest Softech(India) Limited .)
Report on the Internal Financial Controls with reference to financial statements underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (the Act')
We have audited the internal financial controls with reference to financial statementsof Quest Softech (India) Solutions Limited (the Company') as of 31stMarch 2021 in conjunction with our audit of the financial statements of the Company forthe year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management and Board of Directors are responsible for establishing andmaintaining internal financial controls based on the internal control with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting (the Guidance Note') issued by the Institute ofChartered Accountants of India (the ICAI'). These responsibilities include thedesign implementation and maintenance of internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note issued by ICAI and the Standards on Auditingprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether internal financial controls with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.
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 financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemwith reference to financial statements.
Meaning of Internal Financial Controls with reference to Financial Statements
A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that-
i. pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
ii. provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
iii. provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.nion
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects adequate internal financial controlssystem with reference to financial statements and such internal financial controls withreference to financial statements were operating effectively as at 31st March2021 based on the internal financial control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note issued by the ICAI
For C K S P AND CO LLP
Date : 29th June 2021