Firstsource Solutions
BSE: 532809 | NSE: FSL | ISIN: INE684F01012 | Computers - Software Medium/Small
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| Auditor's Report | Year End : Mar '09 |
We have audited the attached Consolidated Balance Sheet of Firstsource
Solutions Limited (the Company or the Parent Company) and its
subsidiaries (as per the list appearing in Schedule 1 to the
consolidated financial statements) [collectively referred to as the
Group] as at 31 March 2009, the Consolidated Profit and Loss Account
and the Consolidated Cash Flow Statement of the Group for the year
ended on that date, annexed thereto. The audit was conducted in
accordance with the terms of engagement as specified by the Board of
Directors of the Parent Company.
These consolidated financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally
accepted in India. Those Standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
1. Without qualifying our opinion, we draw attention to Schedule 32 to
the consolidated financial statements. During the year, the Company has
changed the accounting policy relating to premium payable on redemption
of Foreign Currency Convertible Bonds CFCCB or the bonds).
Accordingly, the premium payable on redemption of FCCB is now amortised
on a pro-rata basis over the period of the bonds by debiting Securities
premium account as against the earlier policy of charging the entire
premium payable on redemption to the Securities premium account upfront
in the year of issue of the bonds. Had the Company continued to follow
the earlier policy, the balance in Securities premium account as at 31
March 2009 would have been lower by Rs. (000) 3,305,913 and Current
liabilities (Premium payable on redemption of FCCB) would have been
higher by Rs. (000) 3,305,913.
2. Without qualifying our opinion, we draw attention to Schedule 32 to
the consolidated financial statements that describes the early adoption
by the Group of Accounting Standard (AS-30), Financial Instruments:
Recognition and Measurements, read with AS 31, Financial Instruments -
Presentation, as applicable, along with prescribed limited revisions to
other accounting standards, issued by the Institute of Chartered
Accountants of India, as in managements opinion, it more appropriately
reflects the nature/substance of the related transactions. AS-30, along
with limited revisions to the other accounting standards, has not
currently been notified by the National Advisory Council for Accounting
Standards (NACAS).
The Group has accounted for assets and liabilities as per requirements
of AS-30 including prescribed limited revisions to other accounting
standards. On 1 July 2008, the Company designated the FCCB as hedging
instrument to hedge its net investments made through a subsidiary in a
non-integral foreign operation. Accordingly, the translation loss on
the FCCB, which is determined to be effective hedge of net investment
made in non-integral foreign operation, aggregating to Rs. (000)
1,778,551 for the year ended 31 March 2009 has been recognised in
Translation Reserve. Also, the Company has accounted for embedded
derivative option included in FCCB and revalued the same as at
year-end. Further, the difference between present value of non -
interest bearing deposits and original amount of deposit has been
disclosed as Unamortized cost under Loans and Advances, which is
charged to the Profit and Loss Account over the period of the related
lease. Correspondingly, interest income accrued on the interest free
deposits, using the implicit rate of return, over the period of lease
is recognized under Interest income.
In accordance with the transitional provisions of AS-30, income of Rs.
(000) 691,875 on account of reduction in option valuation of FCCB and
charge of Rs. (000) 5,21 5 on account of fair valuation of deposits
have been accounted through General Reserve.
Had the Group not early adopted AS-30 and the related limited
revisions, profit after taxation for the year ended 31 March 2009 would
have been lower by Rs. (000) 1,534,365, Reserves and Surplus would have
been lower by Rs. (000) 717,524, Unsecured loans would have been lower
by Rs. (000) 469,683, Current liabilities would have been higher by Rs.
(000) 1,192,982 and Current assets would have been higher by Rs. (000)
5,775.
3. As more fully explained in Schedule 22 to the consolidated
financial statements, an application has been made to the Central
Government seeking approval for remuneration to the Managing Director
and the Joint Managing Director of the Parent Company in excess of the
limits prescribed under the Act, for which approval is awaited.
4. We report that the consolidated financial statements have been
prepared by the Groups management in accordance with the requirements
of Accounting Standard (AS-21) Consolidated Financial Statements,
and, read with paragraph 2 above, other accounting standards issued by
the Institute of Chartered Accountants of India and other accounting
principles generally accepted in India.
5. In our opinion, and to the best of our information and according to
the information and explanations given to us, read with paragraphs 1
and 2 above and subject to paragraph 3 above, these consolidated
financial statements give a true and fair view in conformity with the
accounting principles generally accepted in India:
i. in the case of the Consolidated Balance Sheet, of the state of
affairs of the Group as at 31 March 2009;
ii. in the case of the Consolidated Profit and Loss Account, of the
profit of the Group for the year ended on that date; and
iii. in the case of the Consolidated Cash Flow Statement, of the cash
flows of the Group for the year ended on that date.
ANNEXURE TO THE AUDITORS REPORT - 31 MARCH 2009
(Referred to in our report of even date)
1. (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) The Company has a regular programme of physical verification of its
fixed assets by which all fixed assets are verified in a phased manner
annually. In our opinion, this periodicity of physical verification is
reasonable having regard to the size of the Company and the nature of
its assets. No material discrepancies were noticed on such
verification.
(c) Fixed assets disposed off during the year were not substantial and,
therefore, do not affect the going concern assumption.
2. The Company is a service Company, primarily rendering contact
centre, transaction processing and debt collection services. It does
not hold any physical inventories. Accordingly, paragraph 4(ii) of the
Order is not applicable.
3. (a) The following are the particulars of loans granted by the
Company to parties covered in the register maintained under Section 301
of the Act:
Name of Party Relationship Amount Year end Maximum balance
with Company Rs. (000) balance oustanding
Rs.(000) Rs. (000)
FirstRing Inc.,
USA Subsidiary 885,250.45 885,250.45 885,250.45
(b) In our opinion, the rate of interest and other terms and conditions
on which the loan has been granted to the party listed in the register
maintained under Section 301 of the Act are not, prima facie,
prejudicial to the interest of the Company.
(c) In accordance with the terms of the loan, interest and principal
are repayable on demand. According to the information and explanations
given to us, payment of interest and repayment of principal have not
been demanded during the year.
(d) According to the information and explanations given to us, there is
no overdue amount of loans granted to parties listed in the register
maintained under Section 301 of the Act.
(e) According to the information and explanations given to us, the
Company has not taken any loans, secured or unsecured, from companies,
firms or other parties covered in the register maintained under Section
301 of the Act. Accordingly, paragraphs 4(iii)(f) and 4(iii)(g) of the
Order are not applicable.
4. In our opinion and according to the information and explanations
given to us, 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 with regard to the 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.
5. (a) Based on the audit procedures applied by us and according to
the information and explanations provided by the management, we are of
the opinion that the transactions that need to be entered into the
register maintained under Section 301 of the Act have been so entered.
(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
lakh in respect of any party during the year are for the Companys
specialized requirements for which suitable alternate sources are not
available to obtain comparable quotations. However, on the basis of
information and explanations provided, the prices appear reasonable.
6. The Company has not accepted any deposits from the public.
7. In our opinion, the Company has an internal audit system
commensurate with its size and the nature of its business.
8. 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.
9. (a) According 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 Provident Fund, Employees State Insurance,
Income tax, Wealth tax, Service tax, Customs duty, Cess and other
material statutory dues have been generally regularly deposited during
the year with the appropriate authorities. As explained to us, the
Company did not have any dues on account of Sales tax, Excise duty and
Investor Education and Protection Fund.
There were no dues on account of cess under Section 441A of the Act,
since the date from which the aforesaid section comes into force has
not yet been notified by the Central Government.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees
State Insurance, Income tax, Sales tax. Wealth tax. Service tax,
Customs duty, Cess and other material statutory dues were in arrears as
at 31 March 2009 for a period of more than six months from the date
they became payable.
(b) According to the information and explanations given to us, the
following dues of Income tax have not been deposited by the Company on
account of disputes:
Name of the Statute Nature of the Amount
Dues Rs (000)
Income-tax Act, Transfer pricing 40,929.13
1961 demand
Income-tax Act, Assessment under 39,728.49
1961 Section 143
Income-tax Act, Assessment under 15,621.20
1961 Section 143 (3)
Service Tax Rules, Demand notice 23,574.28
1994
Period to which the Forum where dispute is
amount relates pending
2002-03 Commissioner of Income Tax
- Appeals
2003-04 Commissioner of Income Tax
- Appeals
2004-05 Deputy Commissioner of
Income Tax
2007-08 Commissioner of Service Tax
10. The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the financial year
and in the immediately preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers, bondholders or to any financial institutions.
12. The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. In our opinion and according to the information and explanations
given to us, the Company is not a chit fund/ nidhi/ mutual benefit
fund/ society.
14. According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
15. 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 or financial
institutions are, prima facie, not prejudicial to the interest of the
Company.
16. In our opinion and according to the information and explanations
given to us, the term loans taken by the Company have been applied for
the purpose for which they were raised.
17. 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
18. In our opinion and according to the information and explanation
given to us, the Company has not made preferential allotment of shares
to parties covered in the register maintained under Section 301 of the
Act.
19. According to the information and explanations given to us, the
Company has not issued any secured debentures during the year.
20. The Company has not raised any money by public issues during the
year.
21. 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.
For B S R & Co.
Chartered Accountants
Akeel Master
Mumbai Partner
28 April 2009 Membership No.: 046768 |
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| Source : Religare Technova | |
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