TO MEMBERS OF SOUTHERN INFOSYS LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of Southern Infosys Limited ("theCompany") which comprise the Balance Sheet as at March 31 2017 the Statementof Profit and Loss Cash Flow Statement for the year then ended and a summary ofsignificant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsreferred and specified under section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether dueto fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal control relevant to the Company's preparation of the financialstatements that give a true and fair view in order to design audit procedures that areappropriatein the circumstances but not for the purpose of expressing an opinion onwhether the Company has in place an adequate internal financial control system overfinancial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
Basis for Qualified Opinion
(i) The Company is required to make provision for Gratuity in respect of its employeesas required under Payment of Gratuity Act 1965 by following accrual basis and conductingthe valuation by following independent actuarial valuations as at the balance sheet dateby using the project unit cost method as mandated by Accounting Standard-15 on EmployeesCost prescribed in the Companies (Accounting Standards) Rules 2006 and Companies(Accounting Standards) Rules 2016. The Company has not made any provision of Gratuity andthe said non-provision is contravention of Accounting Standard -1 on SignificantAccounting Policies for not adhering to accrual basis as fundamental accounting assumptionand Accounting Standard-15 on Employees Cost prescribed in the Companies (AccountingStandards) Rules 2006. We are unable to ascertain the financial implication of the same.The net profit for the year current assets cumulative net profit are overstated to thatextent
(ii) The provision for Bonus has not been provided in accordance with Payment of BonusAct. We are unable to ascertain the financial implication of the same. The net profit forthe year current assets & cumulative net profits are overstated to that extent.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2017 and its profit/loss and its cash flows forthe year ended on that date.
Report on Other Legal and Regulatory Requirements
1. 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.
2. As required by section 143(3) of the Act we report that:
a. We have sought and obtained all t h e information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit. b. In our opinionproper books of account as required by law have been kept by the Company so far as appearsfrom our examination of those books;
c. The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the book of account; d. In our opinion the aforesaidstandalone financial statements comply with the
Accounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules2014;
e. On the basis of written representations received from the directors as on
March 31 2017 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2017 from being appointed as a director in terms ofsection164 of the Companies Act 2013.
f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
g. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2015 in our opinionand to the best of our information and according to the explanations given to us :-
i. The Company has no pending litigations in the financial year 2016-17.
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 which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in the financial statements asregards the holding and as well as dealings in Specified Bank Notes as defined in theNotification S. O. 3407(E) dated 8th November 2016 of the Ministry of Finance Govt. ofIndia during the period from 8th November 2016 to 30th December 2016.
Based on audit procedures performed and the representations provided to us by themanagement we report that the disclosures are in accordance with the relevant books ofaccounts maintained by company. (Refer Note 23 to the standalone financialstatements)
For V Sahai Tripathi & Co.
Firm's Registration Number : 000262N
Membership No. 91607
Place : New Delhi
Dated : May 30 2017
ANNEXURE A TO AUDITORS' REPORT
(Referred to in paragraph (1) of our report on other legal and regulatory requirementsof Independent Auditor's Report of even date)
Annexure referred to in paragraph (1) of the report on other legal and regulatoryrequirements of Independent Auditor's Report to the members of Southern Infosys Limited onthe financial statements for the year ended March 31 2017
1) In respect of Fixed Assets:-
(a) The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets; (b) All the fixed assets have beenphysically verified by the management during the financial year ended 31st March 2017. Nomaterial discrepancies were noticed on such verification.
(c) There are no immovable properties in the Company accordingly this clause does notapply to the Company during the financial year ended 31st March2017.
2) Physical verification of inventory has been conducted at reasonable intervals by themanagement and discrepancies noticed on verification between the physical stocks and thebook records were not material.
3) The Company has not granted loans to companies firms Limited Liability Partnershipor other parties covered in the register maintained under section 189 of the CompaniesAct 2013.
4) The company has not granted any loans investments guarantees and securities duringthe year in terms of provisions of section 185 of Companies Act 2013.
The company has complied with all the provisions of section 186 of Companies Act 2013in respect of Inter Company Deposits.
5) The company has not accepted any deposits in terms of the directives issued byReserve Bank of India and as per the provisions of Section 73 to 76 or any other relevantprovisions of the Companies Act 2013 and rules framed there- under. Accordingly thisclause is not applicable on the Company during the year ended 31st March 2017.
6) According to information and explanations given to us the Central Government hasnot prescribed the maintenance of cost records under sub- section (1) of section 148 ofthe Companies Act 2013 in respect of business carried out by the Company. Accordinglythis clause is not applicable on the Company during the year ended 31st March 2017.
7) In respect of statutory dues: a) According to the information and explanations givento us and the records of the company examined by us in our opinion the company isgenerally regular in depositing the undisputed statutory dues including provident fundemployees' state insurance income-tax sales-tax service tax duty of customs duty ofexcise value added tax cess and any other statutory dues with the appropriateauthorities. According to the information and explanations given to us no undisputedamount payable in respect of the aforesaid dues were outstanding as at 31st March 2017for a period of more than six months from the date of becoming payable.
b) According to the information and explanations given to us and the records of thecompany produced before us there were no dues in respect of Income-tax Sales TaxService Tax Custom Duty Excise Duty and Value Added Tax as at March 31 2017 which havenot been deposited on account of a dispute pending before appropriate authorities.
8) The company has not taken any loan or borrowing from any Financial InstitutionBank Government or due to Debenture-holders. Accordingly this clause is not applicableon the Company during the year ended 31st March 2017.
9) The company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans. Accordingly this clause is notapplicable on the Company during the year ended 31st March 2017.
10) According to the information and explanations given to us no fraud on the Companyor by the Company by its officers or employees has been noticed or reported during theyear ended 31st March 2017.
11) According to the information and explanations given to us no managerialremuneration has been paid or provided in accordance with the requisite approvals mandatedby the provisions of section 197 read with Schedule V to the Companies Act 2013.Accordingly this clause is not applicable on the Company during the year ended 31st March2017.
12) The company is not a Nidhi Company and since this clause does not apply to theCompany it is not required to maintain ten percent unencumbered term deposits as specifiedin the Nidhi Rules 2014 to meet out the liability.
13) According to the information and explanations given to us and the records of thecompany examined by us all transactions with the related parties are in compliance withSections 177 and 188 of Companies Act 2013 and details have been disclosed in theFinancial Statements etc. as required by the applicableaccountingstandards.
14) According to the information and explanations given to us the company has not madeany preferential allotment or private placement of shares or fully or
42 of the Companies Act 2013 is not applicable.
15) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him andhence the provisions of Section 192 of Companies Act 2013 are not applicable.
16) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934 and hence this clause is not applicable.
For V SahaiTripathi& Co. Chartered Accountants Firm's Registration Number : 000262N
(Manish Mohan) Partner Membership No. 91607
Place : New Delhi Dated : May 30 2017
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF SOUTHERN INFOSYS LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SouthernInfosys Limited ("the Company") as of March 31 2017 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to 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 Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the 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 systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
Pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; Provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and Provide reasonable assurance regardingprevention and 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
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
Disclaimer of Opinion
According to the information and explanation given to us the Company has notestablished its internal financial control over financial reporting on criteria based onor considering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over financial reporting issued by the Institute ofChartered Accountants of India. Because of this reason we are unable to obtain sufficientappropriate audit evidence to provide a basis for our opinion whether the company hadadequate internal financial controls over financial reporting and whether such internalfinancial controls were operating effectively as at March 31 2016.
We have considered the disclaimer reported above in determining the nature volume oftransactions materiality timing and extent of audit test applied in our audit of thestandalone financial statement of the company and the disclaimer does not affect ouropinion on the standalone financial statements of the company.
For and on behalf of
V Sahai Tripathi & Co.
Firm Registration No 000262N
Membership No. 91607
Place : New Delhi
Date : May 30 2017