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.
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.
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
(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
(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
(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
(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
(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
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
Financial Year 2004-05 to 2010-11
Name Amount Forum where dispute is
Income Tax 12.98 Income Tax Appellate Tribunal
2.95 Commissioner of Income Tax
Finance 10.38 Central Excise & Service Tax
0.16 Joint Commissioner of Service
(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
(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.
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
(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
(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
Membership No. 206520 Membership No. 44101
Place : Mumbai Place : Mumbai
Date : May 13, 2013 Date : May 13, 2013