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Xchanging Solutions Ltd.

BSE: 532616 Sector: IT
NSE: XCHANGING ISIN Code: INE692G01013
BSE 00:00 | 25 Apr 48.00 1.55
(3.34%)
OPEN

47.45

HIGH

48.00

LOW

46.60

NSE 00:00 | 25 Apr 47.80 0.80
(1.70%)
OPEN

48.35

HIGH

48.35

LOW

46.65

OPEN 47.45
PREVIOUS CLOSE 46.45
VOLUME 628
52-Week high 65.00
52-Week low 33.60
P/E 41.03
Mkt Cap.(Rs cr) 535
Buy Price 46.80
Buy Qty 200.00
Sell Price 48.00
Sell Qty 108.00
OPEN 47.45
CLOSE 46.45
VOLUME 628
52-Week high 65.00
52-Week low 33.60
P/E 41.03
Mkt Cap.(Rs cr) 535
Buy Price 46.80
Buy Qty 200.00
Sell Price 48.00
Sell Qty 108.00

Xchanging Solutions Ltd. (XCHANGING) - Auditors Report

Company auditors report

TO THE MEMBERS OF XCHANGING SOLUTIONS LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of XCHANGINGSOLUTIONS LIMITED ("the Company") which comprise the Balance Sheet as at 31March 2017 the Statement of Profit and Loss and the Cash Flow Statement for the fifteenmonths period ended on that date and a summary of the significant accounting policies andother 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 Standardsprescribed under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

In conducting our audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act. Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Opinion

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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2017 and its loss and its cash flows for the fifteen months period endedon that date.

Emphasis of Matter

We draw attention to Note 41 to the standalone financial statements regardingredemption of certain debentures aggregating to Rs. 625 Lakhs by the Company in the year2007. On the basis of an interim application filed by the Third Party the Hon'ble HighCourt had passed an Interim Order in September 2007 restraining the Company fromreflecting the redemption of debentures and directing the Company to continue to show itas due and payable which Order was made absolute in December 2010. The Hon'ble Madras HighCourt vide order dated September 28 2016 dismissed the suit filed by the said Third Partyand also set aside the interim order. The Third Party has approached the Hon'ble SupremeCourt against the said Order of the Hon'ble Madras High Court. On January 20 2017 theHon'ble Supreme Court has issued notice to the Company. Based on the legal adviceobtained the Company is of the opinion that no adjustments are considered necessary inthe standalone financial statements.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143 (3) of the Act based on our audit we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards prescribed under section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2017 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

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 has disclosed the impact of pending litigations on its financialposition in its standalone financial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

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

iv. The Company did not have any holdings or dealings in Specified Bank Notes asdefined in the Notification S.O. 3407(E) dated the 8th November 2016 of the Ministry ofFinance during the period from 8th November 2016 to 30th December 2016.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm Regn. No 117366WW-100018)
Bhavani Balasubramanian
Place : Bangalore Partner
Date : May 29 2017 (Membership No. 22156)

Referred to in paragraph 1 (f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date

Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of XCHANGINGSOLUTIONS LIMITED ("the Company") as of 31 March 2017 in conjunction withour audit of the standalone financial statements of the Company for the fifteen monthsperiod ended on that date.

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 responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor's Responsibility

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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 whether a risk of material weakness exists 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 (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

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.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 March 2017 based on "the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India".

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm Regn. No 117366WW-100018)
Bhavani Balasubramanian
Place : Bangalore Partner
Date : May 29 2017 (Membership No. 22156)

ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the members of Xchanging Solutions Limited on theaccounts for the fifteen months period ended 31 March 2017)

i. In respect of fixed assets :

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a program of verification of fixed assets to cover all the items ina phased manner over a period of 2 years which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. Pursuant to the programcertain fixed assets were physically verified by the Management during the period.According to the information and explanations given to us no material discrepancies werenoticed on such verification.

(c) The Company does not have any immovable properties of freehold or leasehold landand building and hence reporting under clause (i) (c) of the CARO 2016 is not applicable.

ii. The Company does not have any inventory and hence reporting under clause (ii) ofthe CARO 2016 is not applicable.

iii. In our opinion and according to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under section189 of the Companies Act 2013.

iv. The Company has not granted any loans made investments or provided guarantees andhence reporting under clause (iv) of the CARO 2016 is not applicable.

v. According to the information and explanations given to us the Company has notaccepted any deposits during the period. There were no unclaimed deposits at any timeduring the period.

vi. The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Companies Act 2013.

vii. According to the information and explanations given to us in respect of statutorydues:

(a) The Company has been regular in depositing undisputed statutory dues includingProvident Fund Employees' State Insurance Income-tax Sales Tax Service Tax ValueAdded Tax cess and other material statutory dues applicable to it with the appropriateauthorities.

(b) There were no undisputed amounts payable by the Company in respect of ProvidentFund Employees' State Insurance Income-tax Sales Tax Service Tax Value Added Taxcess and other material statutory dues in arrears as at 31 March 2017 for a period ofmore than six months from the date they became payable.

(c) Details of dues of Income Tax which have not been deposited as on 31 March 2017 onaccount of disputes are given below:

Nature of Statute Nature of dues Forum where dispute is pending Period to which amount relates Amount unpaid (Rs. In lakhs)
Income Tax Act 1961 Income Tax Commissioner (Appeals) Financial year 2003-04 to 2005-06 259(*)
Income Tax High Court Financial year 2008-09 159(**)
Income Tax Income Tax Appellate Tribunal Financial year 2009-10 12
Income Tax Income Tax Appellate Tribunal Financial year 2011-12 1846

(*) Net of Rs. 1130 lakhs paid under protest

(**) Net of Rs. 170 lakhs paid under protest

viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of loans or borrowings to financialinstitutions banks and government. The Company has not issued any debentures.

ix. The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause (ix) ofthe CARO 2016 Order is not applicable.

x. To the best of our knowledge and according to the information and explanations givento us no fraud by the Company and no material fraud on the Company by its officers oremployees has been noticed or reported during the period.

xi. In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

xii. The Company is not a Nidhi Company and hence reporting under clause (xii) of theCARO 2016 Order is not applicable.

xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.

xiv. During the period the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of CARO 2016 is not applicable to the Company.

xv. In our opinion and according to the information and explanations given to usduring the period the Company has not entered into any non-cash transactions with itsdirectors or persons connected with him and hence provisions of section 192 of theCompanies Act 2013 are not applicable.

xvi. The Company is not required to be registered under section 45-I of the ReserveBank of India Act 1934.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm Regn. No 117366WW-100018)
Bhavani Balasubramanian
Place : Bangalore Partner
Date : May 29 2017 (Membership No. 22156)