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3i Infotech
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« Mar 12
Auditor's Report (3i Infotech) Year End : Mar '13
Report on the Financial Statements
 
 We have audited the accompanying financial statements of 3i Infotech
 Limited (the Company), which comprise the Balance Sheet as at March
 31, 2013, the Statement of Profit and Loss and the Cash Flow Statement
 of the Company for the year then ended and a summary of the significant
 accounting policies and other explanatory information.
 
 Management''s Responsibility for the Financial Statements
 
 The Company''s Management is responsible for the preparation of these
 financial statements that give a true and fair view of the financial
 position, financial performance and cash flows of the Company in
 accordance with the Accounting Standards referred to in sub-section
 (3C) of section 211 of the Companies Act, 1956 (the Act). 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 fraud or error.
 
 Auditors'' Responsibility
 
 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 the
 ethical requirements and plan and perform the audit to obtain
 reasonable assurance about whether the financial statements are free
 from material misstatement.
 
 An audit involves performing procedures to obtain audit evidence about
 the amounts and the disclosures in the financial statements. The
 procedures selected depend on the auditor''s 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 the internal control relevant to the
 Company''s preparation and fair presentation of the financial statements
 in order to design audit procedures that are appropriate in the
 circumstances. An audit also includes evaluating the appropriateness of
 accounting policies used and the reasonableness of the accounting
 estimates made by the 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 basis for our audit opinion.
 
 Opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, 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 principles generally accepted in
 India :
 
 (a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2013;
 
 (b) in the case of the Statement of Profit and Loss, of the loss of the
 Company for the year ended on that date and
 
 (c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Emphasis of Matter :
 
 Without qualifying, we draw attention to note no. 2.27.1 of financial
 statements regarding the proposed scheme of arrangement under section
 391 of the Companies Act, 1956 impairment analysis and justification of
 carrying deferred tax asset of Rs. 103.66 crores.
 
 Report on Other Legal and Regulatory Requirements
 
 (1) As required by the Companies (Auditor''s 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) As required by section 227(3) of the Act, we report that:
 
 (a) 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
 those books;
 
 (c) the Balance Sheet, Statement of Profit and Loss and the Cash Flow
 Statement dealt with by this Report are in agreement with the books of
 account;
 
 (d) in our opinion, the Balance Sheet, Statement of Profit and Loss and
 the Cash Flow Statement comply with the Accounting Standards referred
 to in sub-section (3C) of section 211 of the Act.
 
 (e) On the basis of the written representations received from the
 directors as on March 31, 2013 and taken on record by the Board of
 Directors, none of the directors is disqualified as on March 31, 2013
 from being appointed as a director in terms of clause (g) of
 sub-section (1) of section 274 of the Act.
 
 ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING REPORT ON OTHER
 LEGAL AND REGULATORY REQUIREMENTS” OF OUR REPORT OF EVEN DATE TO THE
 
 MEMBERS OF 3i INFOTECH LIMITED
 
 On the basis of such checks as we considered appropriate and according
 to the information and explanations given to us during the course of
 audit, we state that:
 
 (i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) During the year, the Company in accordance to a phased programme
 has verified Furniture & Fixtures, Office equipment, Plant and
 equipment and Computers at three locations which in ouropinion, is
 reasonable considering the size of the Company and nature of its fixed
 assets. The discrepancies noticed on such verification have been dealt
 with in the books of account.
 
 (c) During the year, the Company has not sold/disposed off substantial
 portion of its fixed assets.
 
 (ii) The Company is a service company, primarily rendering information
 technology services. Accordingly, it does not hold any physical
 inventories. Hence, paragraph 4(ii) of the Order, is not applicable.
 
 (iii) As informed, the Company has not granted/taken any loans, secured
 or unsecured to/from companies, firms or other parties covered in the
 register maintained under Section 301 of the Act.
 
 (iv) In our opinion and according to the information and explanations
 given to us, having regard to the explanations that some of the items
 purchased and sale of services are of special nature and suitable
 alternative sources do not exist for obtaining comparable quotations,
 there is an adequate internal control system commensurate with the size
 of the Company and the nature of its business for the purchase of
 inventories and fixed assets and for the sale of goods and services.
 During the course of our audit, no major weakness has been noticed in
 the internal control system.
 
 (v) According to the information and explanations provided by the
 management, we are of the opinion that there are no contracts or
 arrangements that need to be entered into the register required to be
 maintained under Section 301 of the Act.
 
 (vi) The Company has not accepted any public deposits within the
 meaning of Section 58A and 58AA or any other relevant provisions of the
 Act and rules framed thereunder.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) To the best of our knowledge and as explained, the Central
 Government has not prescribed maintenance of cost records under clause
 (d) of sub-section (1) of Section 209 of the Act for the services
 rendered by the Company.  Accordingly, paragraph 4(viii) of the Order
 is not applicable.
 
 (ix) (a) The Company has during the year, as explained in note no. 2.26
 has been facing liquidity stress due to which there were delays in
 payment of various statutory dues such as provident fund, income tax,
 sales tax, employee state insurance and service tax. However, as at the
 close of the year, there were no arrears outstanding for a period of
 more than six months from the date they become payable except in
 respect of Tax Deducted at Source of Rs. 0.67 crores, Service Tax of Rs.
 0.09 crores (since fully paid), Professional Tax of Rs. 0.11 crores
 (since fully paid) and Central Sales Tax ofRs. 0.04 crores.
 
 (b) According to the information and explanations given to us, there
 are no dues of Income Tax, Sales Tax, Service Tax, Custom Duty, Wealth
 tax, Excise Duty and Cess which have not been deposited on account of
 any dispute except following :
 
 Name of       Nature of     Period to which amount Relates 
 Statute       Demand 
 
 Income Tax    Income Tax    Assessment Year 1999-00 to 
 Act, 1961                   2001-02 & 2006-07 to 2008-09
 
                             Assessment Year 2003-04 to 2006-07 
 
 Finance       Service Tax   Financial Year 2004-05 to 2010-11
 Act, 1994  
 
                             Financial Year 2004-05 to 2010-11
 
 Name          Amount       Forum where dispute is 
               (Rs.crores)  pending 
 
 Income Tax     12.98       Income Tax Appellate Tribunal
 
                 2.95       Commissioner of Income Tax
                           (Appeals) 
 
 Finance        10.38       Central Excise & Service Tax
                            Appellate Tribunal 
 
                 0.16       Joint Commissioner of Service
                            Tax 
 
 (x) The Company''s accumulated losses at the end of the financial year
 do not exceed 50% of its net-worth. It has incurred cash losses in the
 current year under review and in the immediately preceding financial
 year.
 
 (xi) a) During the year, there have been delays ranging between 1 - 3
 months in repayment of dues to the banks - principal amount involved of
 Rs. 6.30 crores and interest amount involved of Rs. 5.13 crores.
 
 b) In case of certain banks, the Company has defaulted (ranging from
 2-18 months) in repaying the principal and interest aggregating to Rs.
 12.46 crores.
 
 c) Further, in case of one of the banks who did not opt for Corporate
 Debt Restructuring (CDR) scheme, the Company has defaulted (ranging
 from 1 to 18 months) in repaying the principal and interest aggregating
 to Rs.  112.26 crores.
 
 (xii) In our opinion and according to the information and explanations
 given to us, and based on the documents and records produced to us, the
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares, debentures and other securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
 benefit fund/society. Therefore, the provisions of clause 4(xiii) of
 the Order are not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments.  Accordingly, the
 provisions of clause 4(xiv) of the Order are not applicable to the
 Company.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the terms and conditions on which the Company has given
 guarantees for loans taken by others from banks and financial
 institutions, are not, prima facie prejudicial to the interest of the
 Company.
 
 (xvi) In our opinion and according to the information and explanations
 given to us, the term loans were applied for the purposes for which
 they were obtained.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the Balance sheet and Cash Flow Statement of
 the Company, in our opinion, the funds raised on short term basis have,
 prima facie, not been used for long term investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties and companies covered in the register maintained under
 Section 301 of the Act.
 
 (xix) The Company has not issued any debentures during the year or in
 the recent past.
 
 (xx) The Company has not raised any money by public issues during the
 year or in the recent past.
 
 (xxi) During the course of our examination of the books of account and
 records of the Company carried out in accordance with the generally
 accepted auditing practices in India, we have neither come across any
 instance of fraud on or by the Company, noticed or reported during the
 year nor have been informed of such case by the management.
 
 For R.G.N. PRICE & CO.             For LODHA & COMPANY
 
 Chartered Accountants              Chartered Accountants
 
 Firm Registration No : 002785S     Firm Registration No : 301051E
 
 Mahesh Krishnan                    R.P. Baradiya
 
 Partner                            Partner
 
 Membership No. 206520              Membership No. 44101
 
 Place : Mumbai                     Place : Mumbai
 
 Date : May 13, 2013                Date : May 13, 2013
Source : Dion Global Solutions Limited
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