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Tata Elxsi Ltd.

BSE: 500408 Sector: IT
NSE: TATAELXSI ISIN Code: INE670A01012
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VOLUME 27668
52-Week high 9420.00
52-Week low 3532.05
P/E 95.27
Mkt Cap.(Rs cr) 52,368
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 8505.00
CLOSE 8259.30
VOLUME 27668
52-Week high 9420.00
52-Week low 3532.05
P/E 95.27
Mkt Cap.(Rs cr) 52,368
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Tata Elxsi Ltd. (TATAELXSI) - Auditors Report

Company auditors report

To the Members of Tata Elxsi Limited

Report on the Audit of the Ind AS Financial Statements

Opinion

We have audited the Ind AS financial statements of Tata Elxsi Limited("the Company") which comprise the Ind AS balance sheet as at 31 March 2021and the Ind AS statement of profit and loss (including other comprehensive income) Ind ASstatement of changes in equity and Ind AS statement of cash flows for the year then endedand notes to the Ind AS financial statements including a summary of the significantaccounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Ind AS financial statements give the informationrequired by the Companies Act 2013 ("Act") in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at 31 March 2021 and profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of the Ind AS FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the 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 opinion on the 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 Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the Ind AS financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

The key audit matter How the matter was addressed in our audit
Accuracy of revenue recognition in respect of fixed price contracts (Refer Note 2.4 to the financial statements) In view of its significance we applied the following audit procedures in this matter among others to obtain sufficient appropriate audit evidence:
The Company engages in fixed price contracts with its customers where revenue from each contract is recognized based on percentage of completion. This involves computation of actual cost incurred and estimation of total cost on each contract to measure progress towards completion (the input method). • Obtained an understanding on the systems processes and controls implemented by the Company with respect to recognition of actual cost incurred on each contract (including allocation and apportionment) estimation of future cost to completion estimation of provision for onerous contract measurement of unbilled revenue unearned revenue and the total contract revenue on its completion.
Accuracy of revenue recognition in respect of fixed price contracts has been identified as a Key Audit Matter considering that: • Involved Information technology (‘IT') specialists to assess the design and operating effectiveness of key IT controls relating to revenue recognition and in particular:
• these contracts involve identification of actual cost incurred on each contract including allocation and apportionment; • IT environment in which the business systems operate including access controls program change controls program development controls and IT operation controls;
• these contracts require estimation of future cost- to completion of each contract as well as critical estimates to make provision for onerous contract; • Access and application controls pertaining to time recording and allocation systems which prevent unauthorised changes to recording of costs and revenue.
• at year-end a significant amount of contract assets (unbilled revenue) and contract liabilities (unearned revenue) related to each contract is to be identified. • For selected samples of fixed contracts -
• Evaluated the contractual terms to identify the performance obligation and assessed the basis of revenue recognition;
• Checked the approval for estimates of cost to completion by authorised personnel of the Company;
• Carried out a retrospective assessment of costs incurred with estimated costs to identify any significant variation and checked whether those variations have been considered in estimating the remaining costs to complete the contract; and
• Verified the contract assets and contract liabilities on balance sheet by evaluating the underlying documentation to identify possible delays in achieving milestones which require change in estimated costs to complete the remaining performance obligations;
• Checked journal entries impacting the revenue recognition for the period selected based on specified risk-based criteria.
• Checked the adequacy of provision in respect of onerous contracts.

Other Information

The Company's Management and Board of Directors are responsible for theother information. The other information comprises the information included in theCompany's annual report but does not include the Ind AS financial statements and ourauditors' report thereon. The other information is expected to be made available to usafter the date of the Auditor's report.

Our opinion on the Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Ind AS financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the other information if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance and take necessary actions as applicable under the relevant laws andregulations.

Management's and Board of Directors' Responsibility for theInd AS Financial Statements

The Company's Management and Board of Directors are responsible for thematters stated in section 134(5) of the Act with respect to the preparation of these IndAS financial statements that give a true and fair view of the state of affairsprofit/loss and other comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Act.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 accuracy and completeness of theaccounting records relevant to the preparation and presentation of the Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the Ind AS financial statements the Management and Boardof Directors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the Ind AS FinancialStatements

Our objectives are to obtain reasonable assurance about whether the IndAS financial statements as a whole are free from material misstatement whether due tofraud or 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 SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these Ind AS financial statements.

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 theInd AS financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate 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 in the Ind AS financialstatements made by the Management and Board of Directors.

• Conclude on the appropriateness of the Management and Board ofDirectors use of the going concern basis of accounting and based on the audit evidenceobtained whether a material uncertainty exists related to events or conditions that maycast significant doubt on the Company's ability to continue as a going concern. If weconclude that a material uncertainty exists we are required to draw attention in ourauditor's report to the related disclosures in the Ind AS financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of theInd AS financial statements including the disclosures and whether the Ind AS financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

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 Ind ASfinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditors' 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

1. As required by the Companies (Auditors' Report) Order 2016("the Order") issued by the Central Government in terms of section 143 (11) 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. (A) 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 have beenkept by the Company so far as it appears from our examination of those books.

c) The Ind AS balance sheet the Ind AS statement of profit and loss(including other comprehensive income) the Ind AS statement of changes in equity and theInd AS statement of cash flows dealt with by this Report are in agreement with the booksof account.

d) In our opinion the aforesaid Ind AS financial statements complywith the Ind AS specified under section 133 of the Act.

e) On the basis of the written representations received from thedirectors as on 31 March 2021

taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2021 from being appointed as a director in terms of Section164(2) of the Act.

f) With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in the Auditors'Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations as at 31March 2021 on its financial position in its Ind AS financial statements - Refer Note 33 tothe Ind AS financial statements.

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

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

iv. The disclosures in the Ind AS financial statements regardingholdings as well as dealings in specified bank notes during the period from 8 November2016 to 30 December 2016 have not been made in these financial statements since they donot pertain to the financial year ended 31 March 2021.

(C) With respect to the matter to be included in the Auditors' Reportunder section 197(16):

In our opinion and according to the information and explanations givento us the remuneration paid by the company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.

for B S R & Co. LLP
Chartered A ccountants
Firm Registration number: 101248W/W-100022
Sanjay Sharma
Partner
Place: Bengaluru Membership number: 063980
Date: 22 April 2021 UDIN: 21063980AAAAEL8193

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

With reference to the Annexure A referred to in the paragraph 1 inReport on Other Legal and Regulatory Requirements of the Independent Auditor's Report tothe members of Tata Elxsi Limited (‘the Company') on the Ind AS financial statementsfor the year ended 31 March 2021 we report the following:

(i) (a) The Company has maintained proper records

showing full particulars including quantitative details and situationof fixed assets.

(b) The Company has a regular programme of physical verification of itsfixed assets by which all fixed assets are verified in a phased manner over a period oftwo years. In our opinion this periodicity of physical verification is reasonable havingregard to the size of the Company and the nature of its assets. Pursuant to the programmecertain fixed assets were physically verified during the year and no materialdiscrepancies were noticed on such verification.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of theimmovable properties included in fixed assets are held in the name of the Company.

In respect of immovable properties been taken on lease and disclosed asproperty plant and equipment in the Ind AS financial statements the lease agreements arein the name of the Company.

(ii) The inventory has been physically verified by the managementduring the year. In our opinion the frequency of such verification is reasonable. TheCompany has maintained proper records of inventory. The discrepancies noticed onverification between the physical stock and the book records were not material.

(iii) According to information and Explanation given to us the companyhas not granted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theAct. Accordingly the provisions of Paragraph 3(iii)(a) (b) and (c) of the order are notapplicable to the Company.

(iv) In our opinion and according to the information and explanationsgiven to us the Company does not have any transactions to which the provisions of Section185 and 186 apply. Accordingly the provisions of Paragraph 3(iv) of the order are notapplicable to the Company.

(v) The Company has not accepted any deposits from the public withinthe meaning of the directives issued by the Reserve Bank of India provisions of Section73 to 76 of the Act any other relevant provisions of the Act and the relevant rulesframed thereunder. Accordingly the provisions of Paragraph 3(v) of the order are notapplicable to the Company.

(vi) According to the information and explanations given to us theCentral Government has not prescribed the maintenance of cost records under Section 148 ofthe Act for any of the services rendered by the Company. Accordingly the provisions ofParagraph 3(vi) of the order are not applicable to the Company.

(vii) (a) According to the information and explanations

given to us and on the basis of our examination of the records of theCompany amounts deducted/ accrued in the books of account in respect of undisputedstatutory dues including Provident fund Employees' State Insurance Income-tax Goods andServices tax duty of Customs Cess and other material statutory dues have generally beenregularly deposited during the year by the Company with the appropriate authorities. Asexplained to us the Company did not have any dues on account of sales tax service taxduty of excise and Value added tax during the year.

According to the information and explanations given to us noundisputed amounts payable in respect of Provident fund Employees' State InsuranceIncome- tax Goods and Services tax duty of Customs Cess and other material statutorydues were in arrears as at 31 March 2021 for a period of more than six months from thedate they became payable.

(vii) (b) According to the information and explanations given to usthere are no dues of Income tax or Sales tax

or Service tax or Goods and Service tax or duty of Customs or ValueAdded Tax which have not been deposited on account of any disputes except the following:

Name of the Statute Nature of the Dues Amount (Rs. lakhs) Period to which amount relates (FY) Forum where dispute is pending
The Income Tax Act 1961 Income Tax 67.29 2008-09 Income Tax Appellate Tribunal
The Income Tax Act 1961 Income Tax 2930.13 2012-13 Commissioner of Income-tax (Appeals)
The Income Tax Act 1961 Income Tax 291.86 2017-18 Commissioner of Income-tax (Appeals)

(viii) In our opinion and according to the information and explanationsgiven to us the Company did not have any outstanding loans or borrowings from financialinstitutions bank government or debenture holders during the year. Accordingly theprovisions of Paragraph 3(viii) of the order are not applicable to the Company.

(ix) In our opinion and according to the information and explanationsgiven to us the Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordingly theprovisions of Paragraph 3(ix) of the order are not applicable to the Company.

(x) To the best of our knowledge and according to the information andexplanations given to us no material fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanationsgiven to us and based on examination of the records of the Company the Company has paid/provided managerial remuneration in accordance with the requisite approvals mandated bythe provisions of Section 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us in ouropinion the Company is not a Nidhi Company as prescribed under Section 406 of the Act.Accordingly the provisions of Paragraph 3(xii) of the order are not applicable to theCompany.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company all transactions with the relatedparties are in

compliance with Sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.

(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly the provisions of Paragraph 3(xiv) of the orderare not applicable to the Company.

(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly theprovisions of Paragraph 3(xv) of the order are not applicable to the Company.

(xvi) According to the information and explanation given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly the provisions of Paragraph 3(xvi) of the order are not applicableto the Company.

for B S R & Co. LLP
Chartered A ccountants
Firm Registration number: 101248W/W-100022
Sanjay Sharma
Partner
Place: Bengaluru Membership number: 063980
Date: 22 April 2021 UDIN: 2J063980AAAAEL8J93

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT ON THE IND ASFINANCIAL STATEMENTS OF TATA ELXSI LIMITED FOR THE YEAR ENDED 31 MARCH 2021.

Report on the internal financial controls with reference to theaforesaid Ind AS financial statements under Clause (i) of Sub-section 3 of Section 143 ofthe Companies Act 2013

(Referred to in paragraph 2(A)(f) under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference to IndAS financial statements of Tata Elxsi Limited ("the Company") as of 31 March2021 in conjunction with our audit of the Ind AS financial statements of the Company forthe year ended on that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to Ind AS financial statements and suchinternal financial controls were operating effectively as at 31 March 2021 based on theinternal financial controls with reference to financial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as "the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note and the Standards on Auditing prescribedunder section 143(10) of the Act to the

extent applicable to an audit of internal financial controls withreference to financial statements. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to financialstatements were established and maintained and whether such controls operated effectivelyin all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the Ind AS financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to financial statements.

Meaning of Internal Financial controls with Reference to FinancialStatements

A company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to financial statements include those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the Ind AS financial statements.

Inherent Limitations of Internal Financial controls with Reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to Ind AS financial statements to future periods are subject tothe risk that the internal financial controls with reference to Ind AS financialstatements may become inadequate because

of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

for B S R & Co. LLP
Chartered A ccountants
Firm Registration number 101248W/W-100022
Sanjay Sharma
Partner
Place: Bengaluru Membership number: 063980
Date: 22 April 2021 UDIN: 21063980AAAAEL8193

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