To the Members of
Xelpmoc Design and Tech Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statement of Xelpmoc Design andTech Limited ("the Company") which comprise the Balance Sheet as at March 312019 the Statement Profit and Loss (including Other Comprehensive Income) the Statementof Changes in Equity and the Statement of Cash Flows for the year ended on that date anda summary of the significant accounting policies and other explanatory information(hereinafter referred to as "the standalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statement in accordance with theStandards on Auditing Specified under Section 143(10) of the Act (SAs). Ourresponsibilities under those standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Sr. No. ||Key Audit Matter ||Auditor's Response |
|1 ||Accuracy in recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers" (New Indian Accounting Standard effective from 1st April 2018 onwards) ||Principal Audit Procedures |
| || ||We assessed the Company's process and controls to ensure that the impact of the new revenue accounting standard is appropriately dealt with. |
| ||The application of the new revenue accounting standard involves certain key judgments relating to identification of distinct performance obligations determination of transaction price and allocation of the same to the identified performance obligations the appropriateness of the basis used to measure revenue recognized over a period or at a point in time and appropriateness in determining contract asset and contract liability. ||Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing of revenue from contracts with customers as follows: |
| || ||Evaluated the design of internal controls and its operating effectiveness relating to implementat ion of the new revenue accounting standard. |
| ||The new standard requires disclosures which involves collation of information in respect of disaggregated revenue periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date and movement in contract asset and contract liability. Refer Note 24 to the Standalone Financial Statements ||Selected a sample of continuing and new contracts and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations determination of transaction price and allocation of transaction price to each performance obligation determination of transaction price and allocation of transaction price to each performance obligation. |
| || ||We carried out a combination of procedures involving enquiry and observation reperformance and inspection of evidence in respect of operation of these controls. |
| || ||Tested the relevant information technology systems' access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard. |
| || ||Estimated the impact of the new revenue standard as on 1st April 2018 for all the open contracts on the date of adoption. |
| || ||Ensured that appropriate disclosures as required as per the new revenue standards are provided. |
| || ||Selected a sample of continuing and new contracts and performed the following procedures: |
| || ||Read analyzed and identified whether the performance Obligations listed in these contracts were distinct or not. |
| || ||Compared these performance obligations with that Identified and recorded by the Company. |
| || ||Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to record revenue and to test the basis of estimation and recognition of the variable consideration. |
| || ||Samples in respect of revenue recorded for time and material contracts were tested using a combination of approved time sheets including customer acceptances subsequent invoicing and historical trend of collections and disputes. |
| || ||In respect of samples relating to fixed price contracts the percentage of completion of performance obligation used to compute recorded revenue was verified with actual and estimated efforts from the time recording and budgeting systems in place in the company. |
| || ||Actual receipts in case of fixed price contracts |
| || ||Were mapped to performance obligations discharged on the reporting date to calculate the Contract liability i.e. amount received in advance Form customers |
| || ||Unbilled revenue was evaluated to ensure that The performance obligation has been discharged And only the act of raising the invoice on the customer was pending |
| || ||Sample of revenues disaggregated by type Geography and industry verticals was tested with the performance Obligations specified in the underlying contracts. |
| || ||Performed analytical procedures for reasonableness of revenues disclosed by type geography and industry verticals. |
| || ||We reviewed the collation of information by the project leader and budgeting and timekeeping system used to prepare the disclosure relating to the periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. |
|2 ||Accuracy of revenues and onerous obligations in respect of fixed price contracts involves critical estimates ||Principal Audit Procedures Our audit approach was a combination of test of internal controls and substantive procedures which included the following: |
| ||Estimated effort on a project is a critical estimate to determine revenues and liability for onerous obligations. This estimate has a high inherent uncertainty as it requires consideration of parameters like percentage completed up to the reporting date efforts incurred till date and efforts required to complete the remaining unperformed obligations. Refer Notes 1 and 24 to the Standalone Financial Statements. ||Evaluated the design of internal controls relating to recording of efforts incurred and estimation of efforts required to complete the unperformed performance obligations. |
| || ||Tested the access and application controls pertaining to time recording resource allocation and budgeting systems which prevents unauthorized changes to recording of efforts incurred. |
| || ||Selected a sample of contracts and tested the operating effectiveness of the internal controls relating to efforts incurred and estimated. Selected a sample of contracts and performed a detailed review of efforts incurred with estimated efforts to identify significant variations and verify whether those variations have been considered in estimating the remaining efforts to complete the contract. |
| || ||Reviewed a sample of contracts with unperformed performance obligation to identify possible delays in achieving milestones which require change in estimated efforts and cost to complete the remaining performance obligations. |
| || ||Performed analytical procedures and test of details for reasonableness of incurred and estimated efforts. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
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 Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bearon our independence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
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) Wehave sought and obtained all the information and explanations which to the best of ourknowledge 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 Sheetthe Statement of Profit and Loss including Other Comprehensive Income Statement ofChanges in Equity and the Statement of Cash Flow dealt with by this Report are inagreement with the relevant books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended.
e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (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 financialcontrols over financial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provision of Section 197 read with Schedule V to the Act.
h) With respect to the other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany did not have any pending litigations on reporting date;
ii. The company did not have any long-term contracts including derivativescontract for which 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.
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.
Annexure "A" to the Independent Auditor's Report
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Xelpmoc Design and Tech Limited ofeven 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 XELPMOCDESIGN AND TECH LIMITED ("the Company") as of March 31 2019 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
Management's Responsibility for Internal Financial Controls
TheBoardofDirectorsoftheCompanyisresponsiblefor 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 respective 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.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. 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 over financial reporting was established and maintained and if suchcontrols 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 operating effectiveness.Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement 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 internal financial controls system overfinancial reporting of the Company.
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.
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.
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 March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia
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 Xelpmoc Design and Tech Limited ofeven date)
1. In respect of the Company's 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 to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year.Accordingtotheinformationandexplanations given to us no material discrepancies werenoticed on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the company do not hold any title deeds ofimmovable property.
2. The Company is in the business of providing software services and does not have anyphysical inventories. Accordingly reporting under clause 3 (ii) of the Order is notapplicable to the Company.
3. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited Liabilitypartnerships or other parties covered in the Register maintained under section 189 of theAct. Accordingly reporting under clause 3 (iii) (a) (b) and (c) of the Order are notapplicable to the Company.
4. In our opinion and according to the information and explanations given to us thecompany has not advanced loans to directors/ to a company in which the Directors areinterested to which the provisions of Sec 185 of the Companies Act 2013 apply and hencenot commented upon. In our opinion and according to the information and explanations givento us provisions of section 186 of the Company Act 2013 in respect of loans and advancesgiven and investments made have been complied with by the Company.
5. The Company has not accepted any deposits from public in terms of provisions ofsection 73 to 76 of the Companies Act 2013 and the rules framed thereunder and thereforethe provisions of the clause 3 (v) of the Order are not applicable to the Company.
6. The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Companies Act 2013 for the business activities carried out bythe Company. Thus reporting under clause 3(vi) of the order is not applicable to theCompany.
7. According to the information and explanations provided to us and as per the recordsmaintained by the Company in respect of statutory dues: a. The Company has generally beenregular in depositing undisputed statutory dues including Provident Fund Employees'State Insurance Income Tax Goods and Service Tax Cess and other material statutory duesapplicable to it with the appropriate authorities.
b. There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Goods and Service Tax Cess and other material statutory duesin arrears as at March 31 2019 for a period of more than six months from the date theybecame payable.
c. As per information and explanations provided to us and as per the records of theCompany the Company does have any dues as at 31st March 2019 in respect of Income TaxGoods and Service Tax and Cess which have not been deposited on account of any dispute.
8. The Company has not taken any loans or borrowings from financial institutions banksand government or has not issued any debentures. Hence reporting under clause 3 (viii) ofthe Order is not applicable to the Company.
9. In our opinion and according to information and explanations given to us by themanagement monies raised by the company by way of initial public offer were applied forthe purpose for which they were raised though idle/surplus funds which were not requiredfor immediate utilization have been currently invested in short term fixed deposits andliquid mutual fund schemes. The amount of idle/surplus funds invested as on the reportingdate was Rs 179000 (000) (Refer note 16 to the financial statements).
10. Based on audit procedures performed by us for the purpose of reporting the true andfair view of the financial statements of the Company and based on records produced to usand according to information and explanations provided by the management we have neithercome across any instance of material fraud by the Company or any fraud on the Company byits officers or employees.
11. 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 Act.
12. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theOrder is not applicable to the Company.
13. In our opinion and according to the information and explanations given to ustransactions with related parties are in compliance with Section 177 and 188 of theCompanies Act 2013 where applicable and details have been disclosed in the notes to thefinancial statements as required by the applicable accounting standards.
14. Based on the records of the Company and according to the information andexplanations provided the Company has complied with the requirements of provisions ofsection 42 of the Companies Act 2013 in respect of the preferential allotment of sharesduring the year. Based on overall examination of the financial statements and according tothe information and explanations provided to us we report that the amounts raised havebeen used for the purposes for which the funds were raised.
15. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and hence provisions of section 192 of theCompanies Act 2013 are not applicable to the Company.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
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Dated: 24th May 2019