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Disclosure in auditor’s report explanatory

Independent Auditors Report

To the Members of

Infibeam Incorporation LimitedReport on the Financial Statements

We have audited the accompanying financial statements of  Infibeam Incorporation Limited (theCompany), which comprise the Balance Sheet as at 31 March 2014 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.ManagementsResponsibility for the Financial Statements

Management is responsible for the preparation of these financial statementsthat give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (the Act) read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the  design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraudor error.AuditorsResponsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statementsare freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Companys preparation and fair presentation of the financial statements in order to designaudit proceduresthat are appropriate in the circumstancesbut not for thepurpose of expressing an opinion on the effectiveness of entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.


Basis for Qualified Opinion

1.   As more fully explained in note 36 of the financial statements, the Company has given loan to a company amounting to Rs. 9,950,000 (Rs. 10,750,000 given during previous years) in which directors of the Company are directors. Further, the Company has given loan amounting to Rs. 90,000 during previous years to relative of directors. The Company has not obtained the requisite prior approval from the Central Government for these transactions as required under section 295 of the Companies Act, 1956. Additionally, this is not in compliance with Section 185 of Companies Act 2013 which has come into effect from 12 September 2013.Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:

(a)    in thecaseof theBalanceSheet, of the state of affairs of theCompany as at 31 March 2014;

(b)   in thecaseof theStatement of Profit andLoss, of the lossfor the year ended on that date; and

(c)    in thecaseof theCashFlow Statement, of the cash flowsfor the year ended on that date.Report on OtherLegal and RegulatoryRequirements

1.                  As required by the Companies (Auditors Report) Order, 2003 (the Order) issued by the Central Government of India in terms of sub–section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2.                  Asrequired by section227(3) of the Act,we report that:

(a)                Except for the effects of the matters described in paragraph 1 of Basis for Qualified Opinion, we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b)               In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of thosebooks;

(c)                The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by thisReport areinagreement with the books of account;

(d)               In our opinion, the Balance Sheet, the Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and;


(e)                On the basis of  written representations received from the  directors as  on 31 March2014 and takenonrecord by the Board of Directors none of thedirectors is disqualified as on 31 March 2014 from being appointed as a director in terms of clause (g) of sub–section (1) of section 274 of the Act.

For B S R and Co

CharteredAccountants

Firm RegistrationNo:128510W

 Sukrut Mehta
Ahmedabad

Partner

 MembershipNo: 101974
  

(Referredto in our report of evendate)

(i)                 (a)        The fixed assets of the Company represents only intangible assets. Thus paragraph 4(i) (a) and(b) of theOrder is not applicable.

(b)        Nofixedassetshavebeendisposedoff during the year.

(ii)               The Company is a service company, primarily rendering software development, maintenance and other ancillaryservices. Accordingly, it does not hold any physical inventories. Thus,paragraph4(ii) of the Order isnot applicable.

(iii)

(a)

The Company has granted unsecured loans to a relative of director and one  company in which directors of the Company are directors which is covered in the register maintained under section 301 of the Act. The maximum balance outstanding for the same is Rs.10,040,000 and year–end balance is Rs. 9,950,000.

(b)

The above loans are interest free and are repayable on demand. Other than interest, in our opinion, other terms and conditions are prima facie, not prejudicial to the interest of the Company.

(c)

The Companies to whom loans have been granted, as referred to in (a) above, have been regular in payment of principal amount.

(d)

There are no overdueamountsof morethan one lakhs.

(e)

The Company has taken unsecured loans from two directors and two companies in which directors of the Company are directors which is covered in the register maintained under section 301 of the Act. The maximum amountoutstanding during the year was Rs 149,350,300 and the year–end balance of such loans was Rs. 200,300.

(f)

In our opinion, the rate of interest and other terms and conditions on which loan have been taken from the companies covered in the register maintained under Section 301 of the Act are not, prima facie, prejudicial to the interest of the Company.

(g)

The loans taken from the company covered in the register maintainedunder Section 301 of the Act are interest free and considered as repayable on demand. According to the information and explanations given to us, the Company has been regular in repayment of loanswhendemanded.

(iv)             In our opinion and according to the information and explanations given to us, and having regard to the explanation that certain services rendered are for the specialised requirements of the buyers and suitable alternativesourcesare not availableto obtaincomparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and sale of services. The activities of the Company do not involve purchase of inventory and sale of goods. We have not observed any major weakness in the internal control system during the course of theaudit.


(v)                (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintainedunder that section.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs 5 lakhs, with any party, are for specialised requirements of that party for whichsuitablealternativesources arenot available.

(vi)             The Company has not accepted any deposits from the publicduring theyear.

(vii)      In our opinion, the Company has an internal audit system commensurate with the size and natureof itsbusiness.

(viii)         The Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Act, for any of the servicesrenderedby the Company.

(ix)             (a) Acorrding to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Service Tax, Income–tax, and other material statutory are not regularly deposited, whereby there are large number of days delays in certain cases As explained to us, the Company did not have any dues on account of Sales Tax, Provident fund, Professional tax, Employee State Insurance Corporation, Wealth tax, Customs duty, Excise duty, Cess, and Investor Education and ProtectionFund.

According to the information and explanations given to us, no undisputed amounts payable in respect of Service tax, income tax, and other material statutory dues except for Service tax and Tax deducted at source, amounting to Rs. 863,380 were in arrears as at 31 March 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Income–tax, Service tax, and other material statutory dues which have not been deposited with the appropriate authorities on account of any dispute except for the following:

Name      of statute

the

Nature    of the dues

Amount (Rs)

Period   to   which   the amountrelates

Forum       where

dispute             is pending

The   Income Act, 1961

Tax

Income Tax

39,856,991

AY 2011–12

Assessing Officer

(x)               The Company is registered for a period less than five years and hence Clause 4(x) of the Order is currently not applicable to the Company.


(xi)             In our opinion and according to the informationandexplanationsgiven to us,the Company has not defaulted in repayment of dues to any debenture holders. The Company did not have any outstanding dues to any banks and financial institutionsduring the year.

(xii)           According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii)         In our opinion and according to information and explanations given to us, the Company is not a chit fundor a nidhi / mutual benefit fund / society.

(xiv)         According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debenturesandother investments.

(xv)           According to the information and explanations givento us, the Company has not given any guaranteefor loans takenby others from banks or financial institutions.

(xvi)         The Company did not have any term loans outstanding during theyear.

(xvii)       According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short– term basishavenot beenusedfor long–term investment by the Company.

(xviii)     According to information and explanations given to us and on the examination of relevant documents the terms of preferential allotments of shares during the year are not, prima facie,prejudicial to the interest of the Company.

(xix)         The Company has not created any security in respect of outstanding debentures during the year.

(xx)           The Company has not raised any money by public issuesduring the year.

(xxi)         According to the information and explanations given to us, no fraud on or by the Company has beennoticedor reportedduring the courseof our audit.

For B S R and Co

CharteredAccountants

Firm RegistrationNo: 128510WSukrut Mehta

Ahmedabad                                                                                                                                                          Partner

MembershipNo: 101974

Auditor's qualification(s), reservation(s) or adverse remark(s) in auditors' report

As more fully explained in note 36 of the financial statements, the Company has given loan to a company amounting to Rs. 9,950,000 (Rs. 10,750,000 given during previous years) in which directors of the Company are directors. Further, the Company has given loan amounting to Rs. 90,000 during previous years to relative of directors. The Company has not obtained the requisite prior approval from the Central Government for these transactions as required under section 295 of the Companies Act, 1956. Additionally, this is not in compliance with Section 185 of Companies Act 2013 which has come into effect from 12 September 2013. (viii) Acorrding to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Service Tax, Income–tax, and other material statutory are not regularly deposited, whereby there are large number of days delays in certain cases As explained to us, the Company did not have any dues on account of Sales Tax, Provident fund, Professional tax, Employee State Insurance Corporation, Wealth tax, Customs duty, Excise duty, Cess, and Investor Education and Protection Fund. According to the information and explanations given to us, no undisputed amounts payable in respect of Service tax, income tax, and other material statutory dues except for Service tax and Tax deducted at source, amounting to Rs. 863,380 were in arrears as at 31 March 2014 for a period of more than six months from the date they became payable.

Disclosure relating to fixed assets disposed off

No fixed assets have been disposed off during the year.

Disclosure in auditors report relating to loans

The Company has granted unsecured loans to a relative of director and one company in which directors of the Company are directors which is covered in the register maintained under section 301 of the Act. The maximum balance outstanding for the same is Rs.10,040,000 and year–end balance is Rs. 9,950,000. The above loans are interest free and are repayable on demand. Other than interest, in our opinion, other terms and conditions are prima facie, not prejudicial to the interest of the Company. The Companies to whom loans have been granted, as referred to in (a) above, have been regular in payment of principal amount. There are no overdue amounts of more than one lakhs. The Company has taken unsecured loans from two directors and two companies in which directors of the Company are directors which is covered in the register maintained under section 301 of the Act. The maximum amount outstanding during the year was Rs 149,350,300 and the year–end balance of such loans was Rs. 200,300. In our opinion, the rate of interest and other terms and conditions on which loan have been taken from the companies covered in the register maintained under Section 301 of the Act are not, prima facie, prejudicial to the interest of the Company. The loans taken from the company covered in the register maintained under Section 301 of the Act are interest free and considered as repayable on demand. According to the information and explanations given to us, the Company has been regular in repayment of loans when demanded.

Disclosure about loans granted or taken by parties covered under section 301 of companies act

The Company has granted unsecured loans to a relative of director and one company in which directors of the Company are directors which is covered in the register maintained under section 301 of the Act. The maximum balance outstanding for the same is Rs.10,040,000 and year–end balance is Rs. 9,950,000.

Disclosure regarding terms and conditions of loans granted or taken

The above loans are interest free and are repayable on demand. Other than interest, in our opinion, other terms and conditions are prima facie, not prejudicial to the interest of the Company. In our opinion, the rate of interest and other terms and conditions on which loan have been taken from the companies covered in the register maintained under Section 301 of the Act are not, prima facie, prejudicial to the interest of the Company.

Disclosure regarding terms of payment of loans granted or taken

The Companies to whom loans have been granted, as referred to in (a) above, have been regular in payment of principal amount.

Disclosure regarding terms of recovery of loans granted or taken

The loans taken from the company covered in the register maintained under Section 301 of the Act are interest free and considered as repayable on demand. According to the information and explanations given to us, the Company has been regular in repayment of loans when demanded.

Disclosure in auditors report relating to any material fraud reported during period

(viii) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

Disclosure in auditors report relating to purpose and end use of money raised through public issues

(viii) The Company has not raised any money by public issues during the year.

Disclosure in auditors report relating to adequacy of records maintained by share trading companies

(viii) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

Disclosure in auditors report relating to guarantee given

(viii) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

Disclosure in auditors report relating to term loans used for purpose other than for purpose they were raised

(viii) The Company did not have any term loans outstanding during the year.

Disclosure in auditors report relating to nature and amount of fund raised for short–term has been used for long–term or vice versa

(viii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short– term basis have not been used for long–term investment by the Company.

Disclosure in auditors report relating to preferential allotment of shares

(viii) According to information and explanations given to us and on the examination of relevant documents the terms of preferential allotments of shares during the year are not, prima facie, prejudicial to the interest of the Company.

Disclosure in auditors report relating to securities created against debentures issued

(viii) The Company has not created any security in respect of outstanding debentures during the year.

Disclosure in auditors report relating to internal control system

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that certain services rendered are for the specialised requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and sale of services. The activities of the Company do not involve purchase of inventory and sale of goods. We have not observed any major weakness in the internal control system during the course of the audit.

Disclosure in auditors report relating to contracts and arrangements under section 301 of companies act

(iv) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section. (b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs 5 lakhs, with any party, are for specialised requirements of that party for which suitable alternative sources are not available.

Disclosure in auditors report relating to companies internal audit system

In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

Disclosure relating to disputed statutory dues

According to the information and explanations given to us, there are no dues of Income–tax, Service tax, and other material statutory dues which have not been deposited with the appropriate authorities on account of any dispute except for the following: Name of statutetheNature of the duesAmount (Rs)Period to which the amount relatesForum where dispute is pending The Income Act, 1961 Tax Income Tax 39,856,991 AY 2011–12 Assessing Officer

Disclosure in auditors report relating to default in repayment of financial dues

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any debenture holders. The Company did not have any outstanding dues to any banks and financial institutions during the year.

Disclosure in auditors report relating to loans and advances granted by way of pledge of shares debentures and other securities

(viii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

Disclosure in auditors report relating to fixed assets

(i) The fixed assets of the Company represents only intangible assets. Thus paragraph 4(i) (a) and (b) of the Order is not applicable. (b) No fixed assets have been disposed off during the year.

Disclosure in auditors report relating to inventories

The Company is a service company, primarily rendering software development, maintenance and other ancillary services. Accordingly, it does not hold any physical inventories. Thus, paragraph 4(ii) of the Order is not applicable

Disclosure in auditors report relating to deposits accepted from public

(iv) The Company has not accepted any deposits from the public during the year.

Disclosure in auditors report relating to maintenance of cost records

(viii) The Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Act, for any of the services rendered by the Company.

Disclosure in auditors report relating to accumulated losses

(viii) The Company is registered for a period less than five years and hence Clause 4(x) of the Order is currently not applicable to the Company.

Disclosure in auditors report relating to provisions under special statute

(viii) In our opinion and according to information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society.

Disclosure in auditors report relating to statutory dues

(viii) Acorrding to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Service Tax, Income–tax, and other material statutory are not regularly deposited, whereby there are large number of days delays in certain cases As explained to us, the Company did not have any dues on account of Sales Tax, Provident fund, Professional tax, Employee State Insurance Corporation, Wealth tax, Customs duty, Excise duty, Cess, and Investor Education and Protection Fund. According to the information and explanations given to us, no undisputed amounts payable in respect of Service tax, income tax, and other material statutory dues except for Service tax and Tax deducted at source, amounting to Rs. 863,380 were in arrears as at 31 March 2014 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, there are no dues of Income–tax, Service tax, and other material statutory dues which have not been deposited with the appropriate authorities on account of any dispute except for the following: Name of statutetheNature of the duesAmount (Rs)Period to which the amount relatesForum where dispute is pending The Income Act, 1961 Tax Income Tax 39,856,991 AY 2011–12 Assessing Officer

Disclosure relating to regularity in payment of undisputed statutory dues

(viii) Acorrding to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Service Tax, Income–tax, and other material statutory are not regularly deposited, whereby there are large number of days delays in certain cases As explained to us, the Company did not have any dues on account of Sales Tax, Provident fund, Professional tax, Employee State Insurance Corporation, Wealth tax, Customs duty, Excise duty, Cess, and Investor Education and Protection Fund. According to the information and explanations given to us, no undisputed amounts payable in respect of Service tax, income tax, and other material statutory dues except for Service tax and Tax deducted at source, amounting to Rs. 863,380 were in arrears as at 31 March 2014 for a period of more than six months from the date they became payable.

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