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Softtech Engineers Ltd.

BSE: 535078 Sector: IT
NSE: SOFTTECH ISIN Code: INE728Z01015
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Softtech Engineers Ltd. (SOFTTECH) - Auditors Report

Company auditors report

To the Members of SoftTech Engineers Limited

Report on the Audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements of SoftTechEngineers Limited (‘the Company’) which comprise the Standalone Balance Sheetas at 31 March 2019 the Standalone Statement of Profit and Loss and the Standalone CashFlow Statement for the year then ended and a summary of the significant accountingpolicies and other explanatory information.

2. 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 Indiaincluding the Accounting Standards prescribed under Section 133 of the Act read with rule7 of the Companies (Accounts) Rules 2014 (as amended) of the state of affairs of theCompany as at 31 March 2019 and its profit and its cash flows for the year ended on thatdate.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor’s Responsibilities for the Audit of the FinancialStatements’ section of our report. We are independent of the Company in accordancewith the Code of Ethics issued by the Institute of Chartered Accountants of India (TCAT)together with the ethical requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Act and the rules there under and wehave 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.

Key Audit Matters

4. 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.

5. We have determined the matters described below to be the key audit matters to becommunicated in our report.

Key audit matter How our audit addressed the key audit matter
Revenue recognition - fixed price contracts: Our audit of recognition of revenue in respect of fixed price contracts included but were not limited to the following:
(Refer note 2(d) to the accompanying standalone financial statements for accounting policy and Note 21 for the revenue recorded during the year). • Obtained and updated understanding of the revenue stream relating to fixed price contracts.
Revenue from fixed price contracts are recognised based on the milestones achieved as specified in the contracts and for interim stages until the next milestone is achieved on the basis of proportionate completion method. • Evaluated the appropriateness of the Company’s revenue recognition policies;
• Evaluated the design and implementation of key controls over the recognition of contract revenue and tested the operating effectiveness of these controls;
The fixed price revenue contracts of the Company are by their nature complex given the significant judgements involved in estimation of efforts required to complete any particular project. • For a sample of contracts evaluated key management judgments inherent in the estimated hours to complete the underlying ongoing projects that drive the accounting under proportionate completion method by performing the following procedures:
This estimate has a high inherent uncertainty as it requires consideration of progress of the contract efforts incurred till date and efforts required to complete the remaining contract performance obligations and the ability to deliver the contracts within planned timelines. These contract estimates are reviewed by the management on periodic basis. Evaluated the contract terms and conditions; obtained an understanding of the assumptions applied in determining the estimated horns to complete and tested the same for appropriateness basis our understanding of the business and inspecting performed a retrospective review of horns expended with estimated hours in prior periods to identify significant variations if any.
Changes in the estimates as contract progresses can result in material adjustments to revenue recorded by the Company.
As a result of the complexities and judgment involved and significance of the matter with respect to the standalone obtained reasons for any change in estimates of continuing contracts from prior period impacting revenue recognition in previous periods.
financial statements this area has been considered as a key audit matter in the audit of the accompanying standalone assessed the ability to deliver contracts within budgeted timescales.
- Tested a sample of contracts with unbilled revenue to identify possible delays in achieving milestones which requires change in estimated efforts to complete the remaining performance obligations.
Evaluated the appropriateness of the disclosures made in the standalone financial statements with respect to fixed price contract revenue in accordance with the requirements of the applicable accounting standards.
Recoverability of trade receivables(Refer Note 2(e) to the accompanying standalone financial statements for accounting policy and Note 16 for related disclosure) As at31 March 2019 the total receivable balance net of provisions included in Note 16is INR 188227694 (as at 31 March 2018: INR 218027120) Our audit focused on assessing the appropriateness of management’s judgment and estimates used in the impairment analysis through procedures that included but were not limited to the following:
Owing to the nature of operations of the Company and the related customer profiles the Company has significant receivable balances that are past the credit period for the products and services offered by the Company. Allowance for doubtful accounts are established through evaluation of the accounts receivable ageing and prior collection experience current market conditions customers’ financial conditions and the amount of receivable in dispute to ascertain ultimate collectability of these receivables. • Obtained an understanding of the management’s process for computation of trade receivables provisioning and related accounting policies adopted by the management.

• Tested the design implementation and operating effectiveness of the controls that the Company has established in relation to revenue recognition and allowance for trade receivables;

• Tested the ageing profile of trade receivable balances;

• Assessed the recoverability on a sample basis by testing the amounts received subsequent to year-end confirmations received from customers information collected from sales team external available information regarding parties with significant balance outstanding as at year end etc.;
The recoverability of trade receivables and the level of provisions for bad and doubtfid debts are considered to be key risk due to significance of these balances to the financial statements and the judgements required in making appropriate provisions and accordingly this matter has been determined to be a key audit matter for the current year audit. • Evaluated the consistency of judgements applied by the management regarding provision for trade receivables to identify any evidence of management bias in this accounting estimate;
• Evaluated the management’s response to the recoverability of the long outstanding receivable balance which have not been assessed as doubtful by corroborating the same with underlying documentation and correspondence with the customer.
• Evaluated the appropriateness of disclosures made in the standalone financial statements with respect to the trade receivables and provisioning thereof.
Development costs towards intangible assets under development

(Refer Note 2(1) to the accompanying standalone financial statements for accounting policy and Note 11 and Standalone Balance Sheet for related disclosure)

Our audit focused on assessing the appropriateness of management’s judgment and estimates used in the assessment of cost to be capitalized through procedures that included but were not limited to the following:
The Company’s research and development personnel are involved in the development of new software offerings enhancements to existing software and maintenance. Such development costs are being capitalized by the Company in accordance with AS 26 Intangible assets. • Obtained an understanding of the management process of identifying and measuring costs incurred towards research and development of intangible assets allocation of such costs between research phase and development phase and determining the appropriate accounting treatment of such items;
Significant judgements relevant for capitalization of development expenses include determining whether the recognition criteria under AS 26 have been met which • Tested the design and operating effectiveness of the controls that the Company has established in relation to intangible assets under development including controls around approvals cost estimation allocation of costs and capitalization;
includes assessment of technical and economic feasibility of completing the intangible asset the entity’s intention and • Evaluated the accounting policy for appropriateness in accordance with AS 26 Intangible Assets.
ability to sell/use the intangible asset in order to generate future economic benefits and the entity’s ability to measure reliably the expenditure attributable to the intangible asset during its development • Discussed with management including development personnel the nature and amount of work completed for each product group and their assessment of the areas of judgement for each in particular the stage of technical development and economic feasibility and their assessment of recognition criteria of intangible assets under AS 26;
Our audit focused on this area due to the value of the research and development costs incurred by the Company the bi-furcation required between research expenses to be expensed off and the development costs to be capitalized the allocation of costs incurred towards the development activities of the respective ongoing projects and the judgement involved in assessing recognition criteria for capitalization of development costs as per specific accounting standard requirements. Accordingly this matter has been determined to be a key audit matter for the current year audit. • Tested the underlying costs by inspection of supporting documents such as payroll records vendor contracts invoices and delivery evidence.
• For intangible assets under development that are capitalized upon successful completion of their development tested the accuracy of cost calculations and evaluated management’s assessment of amortization period and amortization method used.
• Evaluated the appropriateness of the disclosures made in the standalone financial statements with respect to intangible assets under development in accordance with the requirements of the applicable accounting standards.

Information other than the Standalone Financial Statements and Auditor’s Reportthereon

6. The Company’s Board of Directors is responsible for the other information. Theother information comprises the information included in the Annual Report but does notinclude the financial statements and our auditor’s report thereon. The Annual Reportis expected to be made available to us after the date of this auditor's report.

Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated

When we read the Annual Report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

7. The Company’s Board of Directors is responsible for the matters stated inSection 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financial performanceand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Accounting Standards prescribed under Section 133 of theAct read with rule 7 of the Companies (Accounts) Rules 2014 (as amended). 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 standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

8. In preparing the standalone financial statements management is responsible forassessing the Company’s ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

9. The Board of Directors are also responsible for overseeing the Company’sfinancial reporting process.

Auditor’s Responsibilities for the Audit of the Standalone Financial Statements

10. 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with Standards on Auditing will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are

considered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesestandalone financial statements.

11. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgment and maintain professional scepticism 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 in place and the operating effectiveness ofsuch 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 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 theCompany to cease to continue as a 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.

12. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and communicate withthem all relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

14. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalone financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor’s report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

15. As required by Section 197(16) of the Act we report that the Company has paidremuneration to its directors during the year in accordance with the provisions of andlimits laid down under Section 197 read with Schedule V to the Act.

16. As required by the Companies (Auditor’s Report) Order 2016 (‘theOrder’) issued by the Central Government of India in terms of Section 143(11) of theAct we give in Annexure A a statement on the matters specified in paragraphs 3 and 4 ofthe Order.

17. Further to our comments in Annexure A as required by Section 143(3) of the Act wereport that:

a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose 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 financial statements dealt with by this report are in agreement withthe books of account;

d) in our opinion the aforesaid standalone financial statements comply with theAccounting Standards prescribed under Section 133 of the Act read with rule 7 of theCompanies (Accounts) Rules 2014 (as amended);

e) on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2019 from being appointed as a director in terms of S ection 164(2) of the Act;

f) we have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as on 31 March 2019in conjunction with our audit of the standalonefinancial statements of the Company for the year ended on that date and our report dated27 May 2019 as per Annexure B expressed an unmodified opinion;

g) with respect to the other matters to be included in the Auditor’s Report inaccordance with rule 11 of the Companies (Audit and Auditors) Rules 2014 (as amended) inour opinion and to the best of our information and according to the explanations given tous:

i. the Company as detailed in Note 20 to the financial statements has disclosed theimpact of pending litigations on its financial position;;

ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as at 31 March 2019;

iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31 March2019;

iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these standalone financial statements. Hence reporting under thisclause is not applicable.

For Walker Chandiok& Co LLP

Chartered Accountants

Firm Registration No.: 001076N/N500013

Sd/-

Bharat Shetty

Partner

Membership No.: 106815

Place: Pune

Date: 27 May 2019

Annexure A to the Independent Auditor’s Report of even date to the members ofSoftTech Engineers Limited on the standalone financial statements for the year ended 31March 2019

Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone financial statements of the Company and taking into considerationthe information and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:

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

(b) The Property plant and equipment have been physically verified by the managementduring the year (except Service cell system) and no material discrepancies were noticed onsuch verification. In our opinion the frequency of verification of the property plantand equipment is reasonable having regard to the size of the Company and the nature of itsassets.

(c)The Company does not hold any immovable property (in the nature of ‘propertyplant and equipment’). Accordingly the provisions of clause 3(i)(c) of the Order arenot applicable.

(ii) The Company does not have any inventory. Accordingly the provisions of clause3(ii) of the Order are not applicable.

(iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships (LLPs) or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b)and 3(iii)(c) of the Order are not applicable.

(iv) In our opinion the Company has complied withthe provisions of Sections 185 and186 of the Act in respect of loans investments guarantees and security.

(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) The Central Government has not specified maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company’s products/services. Accordingly the provisions of clause 3(vi) of the Order are not applicable.

(vii) (a) Undisputed statutory dues including provident fund employees’ stateinsurance income-tax sales-tax

service tax duty of customs duty of excise value added tax goods and services taxcess and other material statutory dues as applicable have generally been regularlydeposited to the appropriate authorities though there has been a slight delay in a fewcases. Undisputed amounts payable in respect thereof which were outstanding at theyear-end for a period of more than six months from the date they became payable are asfollows:

Statement of arrears of statutory dues outstanding for more than six months:

Name of the statute Nature of dues Amount Period to which the amount relates Due date Date of payment
Central Goods and Services Tax (CGST) Act 2017 Goods and Services Tax (GST) 2696 Apr-18 20-May-18 20-Apr-19
Central Goods and Services Tax (CGST) Act 2017 GST 14271 May-18 20-Jun-18 20-Apr-19
Central Goods and Services Tax (CGST) Act 2017 GST 8096 Jun-18 20-Jul-18 20-Apr-19
Central Goods and Services Tax (CGST) Act 2017 GST 4780 Jul-18 20-Aug-18 20-Apr-19
Central Goods and Services Tax (CGST) GST 2250 Aug-18 20-Sep-18 20-Apr-19

Annexure A to the Independent Auditor’s Report of even date to the members ofSoftTech Engineers Limited on the standalone financial statements for the year ended 31March 2019

Act 2017
State Goods and Services Tax (SGST) Act 2017 GST 2696 Apr-18 20-May-18 20-Apr-19
State Goods and Services Tax (SGST) Act 2017 GST 14271 May-18 20-Jun-18 20-Apr-19
State Goods and Services Tax (SGST) Act 2017 GST 8096 Jun-18 20-Jul-18 20-Apr-19
State Goods and Services Tax (SGST) Act 2017 GST 4780 Jul-18 20-Aug-18 20-Apr-19
State Goods and Services Tax (SGST) Act 2017 GST 2250 Aug-18 20-Sep-18 20-Apr-19
Integrated Goods and Services Tax (IGST) Act 2017 GST 118940 Apr-18 20-May-18 20-Apr-19
Integrated Goods and Services Tax (IGST) Act 2017 GST 123941 May-18 20-Jun-18 20-Apr-19
Integrated Goods and Services Tax (IGST) Act 2017 GST 125331 Aug-18 20-Sep-18 20-Apr-19

(b) The dues outstanding in respect of income-tax sales-tax service tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:

Statement of disputed dues:

Name of the statute Nature of dues Amount (Rs) Amount paid under Protest (Rs) Period to which the amount relates Forum where dispute is pending Remarks if any
Central Sales Tax Act 1956 Sales tax 4131770 250000 F.Y. 2012-13 Joint Commissioner of Sales Tax
Maharashtra Value Added Tax Act 2002 Sales tax 55505 25000 F.Y. 2012-13 Joint Commissioner of Sales Tax

viii) The Company has not defaulted in repayment of loans or borrowings to any bank orfinancial institution or government during the year.

(ix) In our opinion and according to the information and explanations given to us theCompany has appliedmoneys raised by way of initial public offer and term loans for thepurposes for which these were raised.

(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been provided by the Company in accordance with therequisite approvals mandated by the provisions of Section 197 of the Act read withSchedule V to the Act.

(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of the Act where applicable and the requisite details have beendisclosed in the standalone financial statements etc. as required by the applicableaccounting standards.

Annexure A to the Independent Auditor’s Report of even date to the members ofSoftTech Engineers Limited on the standalone financial statements for the year ended 31March 2019

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.

(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm Registration No.: 001076N/N500013

Sd/-

Bharat Shetty

Partner

Membership No.: 106815

Place: Pune

Date: 27May 2019

Annexure B to the Independent Auditor’s Report of even date to the members ofSoftTech Engineers Limited on the standalone financial statements for the year ended 31March 2019

Independent Auditor’s Report on the Internal Financial Controls under Clause (i)of sub-section 3 of Section 143 of the Companies Act 2013 (‘the Act’)

1. In conjunction with our audit of the standalone financial statements of SoftTechEngineers Limited (‘the Company’) as at and for the year ended 31 March 2019 wehave audited the internal financial controls over financial reporting (‘IFCoFR’)of the Company as at that date.

Management’s Responsibility for Internal Financial Controls

2. The Company’s Board of Directors 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 (the "Guidance Note") issued by the Institute of CharteredAccountants of India (ICAI). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of the Company’s business includingadherence to the Company’s policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Act.

Auditor’s Responsibility

3. Our responsibility is to express an opinion on the Company's IFCoFR based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India (‘ICAI’) and deemed to be prescribedunder Section 143(10) of the Act to the extent applicable to an audit of IFCoFR and theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (‘theGuidance Note’) issued by the ICAI. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate IFCoFR were established and maintained and ifsuch controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effectiveness. Our audit of IFCoFR includes obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor’s judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company’s IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

6. A company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sIFCoFR include those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

7. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that the IFCoFR may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.

Annexure B to the Independent Auditor’s Report of even date to the members ofSoftTech Engineers Limited on the standalone financial statements for the year ended 31March 2019

Opinion

8. In our opinion the Company has in all material respects adequate internalfinancial controls over financial reporting and such controls were operating effectivelyas at 31 March 2019 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note issued by the ICAI.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm Registration No.: 001076N/N500013

Sd/-

Bharat Shetty

Partner

Membership No.: 106815

Place: Pune Date: 27May2019

.