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Subex Ltd.

BSE: 532348 Sector: IT
NSE: SUBEXLTD ISIN Code: INE754A01055
BSE 15:44 | 04 Oct 32.15 0.55
(1.74%)
OPEN

32.00

HIGH

32.70

LOW

31.90

NSE 15:32 | 04 Oct 32.10 0.50
(1.58%)
OPEN

32.00

HIGH

32.75

LOW

31.85

OPEN 32.00
PREVIOUS CLOSE 31.60
VOLUME 313373
52-Week high 61.30
52-Week low 18.70
P/E
Mkt Cap.(Rs cr) 1,812
Buy Price 32.15
Buy Qty 1163.00
Sell Price 0.00
Sell Qty 0.00
OPEN 32.00
CLOSE 31.60
VOLUME 313373
52-Week high 61.30
52-Week low 18.70
P/E
Mkt Cap.(Rs cr) 1,812
Buy Price 32.15
Buy Qty 1163.00
Sell Price 0.00
Sell Qty 0.00

Subex Ltd. (SUBEXLTD) - Auditors Report

Company auditors report

To the Members of Subex Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statementsof Subex Limited ("the Company") which comprise the Standalone Balance Sheet asat March 31 2021 the Standalone Statement of Profit and Loss including the statement ofOther Comprehensive Income/(Loss) the Standalone Cash Flow Statement and the StandaloneStatement of Changes in Equity for the year then ended and notes to the standalone Ind ASfinancial statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as "the standalone Ind AS FinancialStatements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone Ind AS financial statements give theinformation required by the Companies Act 2013 as amended ("the Act") in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2021 its profit including other comprehensive income/(loss) its cash flows and thechanges in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone Ind AS financial statements inaccordance with the Standards on Auditing (SAs) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the standalone Ind AS financial statements' section ofour report. We are independent of the Company in accordance with the 'Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone Ind AS financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements forthe financial year ended March 31 2021. These matters were addressed in the context ofour audit of the standalone Ind AS financial statements as a whole and in forming ouropinion thereon and we do not provide a separate opinion on these matters. For eachmatter below our description of how our audit addressed the matter is provided in thatcontext.

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the standalone Ind AS financialstatements section of our report including in relation to these matters. Accordingly ouraudit included the performance of procedures designed to respond to our assessment of therisks of material misstatement of the standalone Ind AS financial statements. The resultsof our audit procedures including the procedures performed to address the matters belowprovide the basis for our audit opinion on the accompanying standalone Ind AS financialstatements.

Key audit matters How our audit addressed the key audit matter
Impairment assessment of Investments in Subsidiaries (as described in note 5 of the standalone Ind AS financial statements)
As at March 31 2021 the net carrying value of investment in wholly owned subsidiaries in the standalone Ind AS balance sheet amounts to ' 47561 lakhs. Our audit procedures included the following:
(i) We evaluated the Company's internal controls over its annual impairment assessment and key assumptions applied such as revenue growth operating margins discount rates and terminal growth rates
To assess if there is an impairment of the carrying value of investment management conducted impairment tests annually or whenever changes in circumstances or events indicate that the carrying amount of such investment may not be recoverable. An impairment loss is recognized if the recoverable amount is lower than the carrying value.
(ii) We have obtained the valuation assessment from the management and assessed the key assumptions used
The recoverable amount is estimated by calculating the value in use by discounting future cash flows based on future business plans which are reviewed and approved by the Board of Directors of the Company. (iii) We assessed the recoverable value headroom by performing sensitivity testing of key assumptions used
(iv) We tested the arithmetical accuracy of the impairment models used
This is a key audit matter as the testing of investment impairment is complex and involves significant judgement. The key assumptions involved in impairment tests are projected revenue growth operating margins discount rates and terminal growth rate. (v) We discussed potential changes in key drivers as compared to previous year / actual performance with management in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable and
(vi) We assessed the disclosures made in the standalone Ind AS financial statements.
Evaluation of key tax matters (as described in note 32 of the standalone Ind AS financial statements).
Our audit procedures included the following:
The Company operates in multiple jurisdictions and is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business including transfer pricing and indirect tax matters. These involve significant judgment by the Company to determine the possible outcome of the uncertain tax positions consequently having an impact on related accounting and disclosures in the standalone financial statements which have been a matter of significance during the audit and hence considered as a key audit matter. (i) We obtained an understanding and tested the internal controls relating to the identification recognition and measurement of provisions for disputes and disclosures of contingent liabilities in relation to tax
(ii) We obtained confirmation from management's expert on ongoing litigations along with risk assessment and assessed the independence objectivity and competence of the management expert
(iii) We obtained details of tax assessments demands issued by tax authorities orders/notices received with respect to other litigations from the management
(iv) We involved tax specialists to review the status of tax assessments and management's position in relation to on-going disputes regarding likelihood assessment of exposure carried out by the management and
(v) We assessed the adequacy disclosures made in the standalone Ind AS financial statements.

Other Information

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's report including annexures Business ResponsibilityReport and Report on Corporate Governance (hereinafter together referred to as"reports') but does not include the standalone Ind AS financial statements and ourauditor's report thereon.

Our opinion on the standalone Ind AS financial statements does notcover the other information and we will not express any form of assurance conclusionthereon.

In connection with our audit of the standalone Ind AS financialstatements our responsibility is to read the other information identified above when itbecomes available and in doing so consider whether such other information is materiallyinconsistent with the standalone Ind AS financial statements or our knowledge obtained inthe audit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance forthe Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone Ind ASfinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income/(loss) cash flows and changes in equityof the Company in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 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 andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone Ind AS financial statements management isresponsible 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.

Those Charged with Governance are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone Ind AS financialstatements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also

• Identify and assess the risks of material misstatement of thestandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the goingconcern basis 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 the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalone IndAS financial statements for the financial year ended March 31 2021 and are therefore thekey audit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

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 of the Act we give in the "Annexure 1" a statement on thematters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act we report that

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books

(c) The Standalone Balance Sheet the Standalone Statement of Profitand Loss including the Statement of Other Comprehensive Income/(Loss) the Standalone CashFlow Statement and Standalone Statement of Changes in Equity dealt with by this Report arein agreement with the books of account

(d) In our opinion the aforesaid standalone Ind AS financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Companies (Indian Accounting Standards) Rules 2015 as amended

(e) On the basis of the written representations received from thedirectors as on March 31 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 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 ofthe Company with reference to these standalone Ind AS financial statements and theoperating effectiveness of such controls refer to our separate Report in "Annexure2" to this report

(g) In our opinion the managerial remuneration for the year endedMarch 31 2021 has been paid / provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V to the Act

(h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements - Refer Note 32 to thestandalone Ind AS financial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses; and

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

For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number 101049W/E300004
per Rajeev Kumar
Partner
Membership number: 213803
UDIN 21213803AAAABQ2195
Place of Signature: Bengaluru
Date May 17 2021

Annexure 1 to the Independent Auditor's Report of even date on theStandalone Ind AS Financial Statements of Subex Limited

Statement on the matters specified in paragraph 3 and 4 of theCompanies (Auditor's Report) Order 2016 ("the Order")

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant and equipmentand intangible assets.

(b) Property plant and equipment have been physically verified by themanagement during the year and no material discrepancies were identified on suchverification.

(c) According to the information and explanations given by themanagement there are no immovable properties included in property plant and equipment ofthe Company and accordingly the requirements under paragraph 3(i)(c) of the Order are notapplicable to the Company. In respect of immovable properties of building that have beentaken on lease and disclosed as Right of Use assets in the standalone Ind AS financialstatements the lease agreements are in the name of the Company.

(ii) The Company's business does not involve inventories andaccordingly the requirements under paragraph 3(ii) of the Order are not applicable to theCompany.

(iii) According to the information and explanations given by themanagement the Company has not granted any loans secured or unsecured to companiesfirms Limited Liability Partnerships or other parties covered in the register maintainedunder section 189 of the Companies Act 2013 ('the Act"). Accordingly the provisionsof clause 3(iii) (a) (b) and (c) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanationsgiven by the management the Company has complied with the provisions of section 185 and186 of the Act in respect of grant of loans to directors including entities in which theyare interested and in respect of loans and advances given making investments andproviding guarantees and securities as applicable.

(v) 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) To the best of our knowledge and as explained the CentralGovernment has not specified the maintenance of cost records under Section 148(1) of theAct for the products/ services of the Company.

(vii) (a) The Company is generally regular in depositing withappropriate authorities undisputed statutory dues including provident fund employees'state insurance income-tax duty of custom goods and services tax cess and othermaterial statutory dues applicable to it.

(b) According to the information and explanations given by themanagement no undisputed amounts payable in respect of provident fund employees' stateinsurance income-tax duty of customs goods and services tax cess and other materialstatutory dues were outstanding at the year end for a period of more than six monthsfrom the date they became payable.

(c) According to the records of the Company there are no dues ofincome-tax sales-tax service tax duty of customs duty of excise value added taxgoods and services tax and cess which have not been deposited on account of any disputeexcept the following

Name of the Statute Nature of the dues Disputed amount * (Rs. in lakhs) Amount paid/ refund adjusted under protest (Rs. in lakhs) Period to which the amount relates (Financial Year) Forum where dispute is pending
Income Tax Act 1961 Adjustment for transfer pricing disallowances under section 10A and other disallowances 151 - 2014-15 Income Tax Appellate Tribunal ('ITAT') Bangalore
1397 1397 2013-14 Income Tax Appellate Tribunal ('ITAT') Bangalore
379 379 2010-11 Hon'ble High Court of Karnataka
Finance Act 1994 Service tax 1004 924 April 2006 to October 2007 Central Excise and Service Tax Appellate Tribunal Bangalore
3608 - April 2006 to July 2009 Commissioner of Service Tax Bangalore

* Excluding penalty and interest from the date of Order to March 312021.

(viii) The Company did not have any outstanding loans or borrowing duesin respect of a financial institution or bank or to government or dues to debentureholders during the year.

(ix) According to the information and explanations given by themanagement the Company has not raised any money by the way of initial public offer /further public offer (including debt instruments) and term loans during the year. Hencereporting under paragraph 3(ix) of the Order is not applicable to the Company.

(x) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the standalone Ind AS financial statements andaccording to the information and explanations given by the management we report that nofraud by the Company or no fraud on the Company by its officers or employees has beennoticed or reported during the year.

(xi) According to the information and explanations given by themanagement the managerial remuneration for the year ended March 31 2021 has been paid /provided by the Company to its directors in accordance with the provisions of section 197read with Schedule V to the Act.

(xii) In our opinion the Company is not a nidhi company. Thereforethe provisions of clause 3(xii) of the Order are not applicable to the Company.

(xiii) According to the information and explanations given by themanagement transactions with the related parties are in compliance with section 177 and188 of the Act where applicable and the details have been disclosed in the notes to thestandalone Ind AS financial statements as required by the applicable accountingstandards.

(xiv) According to the information and explanations given to us and onan overall examination of the standalone balance sheet the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review and hence reporting requirements under clause3(xiv) are not applicable to the Company.

(xv) According to the information and explanations given by themanagement the Company has not entered into any non-cash transactions with directors orpersons connected with him as referred to in section 192 of the Act.

(xvi) According to the information and explanations given by themanagement the provisions of section 45-1A of the Reserve Bank of India Act 1934 are notapplicable to the Company.

For S. R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number 101049W/E300004
per Rajeev Kumar
Partner
Membership number: 213803
UDIN 21213803AAAABQ2195
Place of Signature: Bengaluru
Date: May 17 2021

Annexure 2 to the Independent Auditor's Report of even date on theStandalone Ind AS Financial Statements Of Subex Limited

Report on the Internal Financial Controls under Clause (i) ofSubsection 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls with reference tostandalone Ind AS financial statement of Subex Limited ('the Company") as of March31 2021 in conjunction with our audit of the standalone Ind AS financial statements ofthe Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Management 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 issued by the Institute of Chartered Accountants 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 its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to these standalone Ind AS financial statements based onour audit. We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting (the "Guidance Note") andthe Standards on Auditing as specified under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both issued by the ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to these standalone Ind AS financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to these standalone Ind ASfinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone Ind AS financial statements included obtaining anunderstanding of internal financial controls with reference to these standalone Ind ASfinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlswith reference to these standalone Ind AS financial statements.

Meaning of Internal Financial Controls With Reference to theseStandalone Ind AS Financial Statements

A Company's internal financial control with reference to standalone IndAS financial statements 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'sinternal financial control with reference to standalone Ind AS financial statementsincludes those policies and procedures that (1) pertain to the maintenance of recordsthat 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 With Reference toStandalone Ind AS Financial Statements

Because of the inherent limitations of internal financial controls withreference to standalone Ind AS financial statements 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 theinternal financial controls with reference to standalone Ind AS financial statements tofuture periods are subject to the risk that the internal financial control with referenceto standalone Ind AS financial statements may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone Ind AS financial statements andsuch internal financial controls with reference to standalone Ind AS financial statementswere operating effectively as at March 31 2021 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note issued by ICAI.

For S. R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number 101049W/E300004
per Rajeev Kumar
Partner
Membership number: 213803
UDIN 21213803AAAABQ2195
Place of Signature: Bengaluru
Date May 17 2021

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