To the Members of Polaris Consulting & Services Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of Polaris Consulting &
Services Limited ("the Company"), which comprise the standalone balance sheet as
at March 31, 2019, and the standalone statement of profit and loss (including other
comprehensive income), standalone statement of changes in equity and standalone statement
of cash flows for the year then ended, and notes to the standalone financial statements,
including a summary of the significant accounting policies and other explanatory
information.
In our opinion and to the best of our information and according to the explanations
given to us, the aforesaid standalone financial statements give the information required
by the Companies Act, 2013 ("Act") in the manner so required and give a true and
fair view in conformity with the accounting principles generally accepted in India, of the
state of affairs of the Company as at March 31, 2019, its profit and other comprehensive
income, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified
under section 143(10) of the Act. Our responsibilities under those SAs are further
described in the Auditors Responsibilities for the Audit of the Standalone Financial
Statements section of our report. We are independent of the Company in accordance with the
Code of Ethics issued by the Institute of Chartered Accountants of India together with the
ethical requirements that are relevant to our audit of the standalone financial statements
under the provisions of the Act and the Rules thereunder, and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the Code of Ethics. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Emphasis of Matter
We draw attention to Note 38 of the standalone financial statements, regarding a
Composite Scheme of Arrangement ("the Scheme") between the Company and Virtusa
Consulting Services Private Limited which was filed with National Company Law Tribunal,
Chennai Bench ("NCLT") on March 28, 2019. As more fully discussed in the
aforesaid note, the scheme has not been approved by NCLT as on the date of this report and
thus, no adjustments have been made to the financial statements in this regard. Our
opinion is not modified in respect of this matter.
Other Information
The Companys management and Board of Directors are responsible for the other
information. The other information comprises the information included in the Companys
annual report but does not include the financial statements and our auditors report
thereon. The annual report is expected to made available to us after the date of this
auditors report.
Our opinion on the standalone financial statements does not cover the other information
and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the standalone financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated. When we read the
annual report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to those charged with governance and take necessary
actions as required under applicable laws and regulations.
Managements Responsibility for the Standalone Financial Statements
The Companys management and Board of Directors are responsible for the matters stated
in section 134(5) of the Act with respect to the preparation of these standalone financial
statements that give a true and fair view of the state of affairs, its profit and other
comprehensive income, changes in equity and cash flows of the Company in accordance with
the accounting principles generally accepted in India, including the Indian Accounting
Standards (Ind AS) specified under section 133 of the Act. This responsibility also
includes maintenance of adequate accounting records in accordance with the provisions of
the Act for safeguarding of the assets of the Company and for preventing and detecting
frauds and other irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls that were operating
effectively for ensuring the accuracy and completeness of the accounting records, relevant
to the preparation and presentation of the standalone financial statements that give a
true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management and Board of Directors are
responsible for assessing the Companys ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
Board of Directors is also responsible for overseeing the Companys financial reporting
process.
Auditors Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone
financial statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditors report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with SAs will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalone
financial statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances. Under section 143(3)(i)
of the Act, we are also responsible for expressing our opinion on whether the company has
adequate internal financial controls with reference to financial statements in place and
the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of managements use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Companys
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditors report to the related disclosures in
the standalone financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditors report. However, future events or conditions may cause the Company to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the standalone
financial statements, including the disclosures, and whether the standalone financial
statements represent the underlying transactions and events in a manner that achieves fair
presentation.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with them
all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2016 ("the Order")
issued by the Central Government in terms of section 143 (11) of the Act, we give in the
"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the
Order, to the extent applicable.
(A) As required by Section 143(3) of the Act, we report that:
a) We have sought and obtained all the information and explanations which to the best
of our knowledge 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 the
Company so far as it appears from our examination of those books.
c) The standalone balance sheet, the standalone statement of profit and loss (including
other comprehensive income), the standalone statement of changes in equity and the
standalone statement of cash flows dealt with by this Report are in agreement with the
books of account.
d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS
specified under section 133 of the Act.
e) On the basis of the written representations received from the directors as on March
31, 2019 taken on record by the Board of Directors, none of the directors is disqualified
as 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 with reference to
financial statements of the Company and the operating effectiveness of such controls,
refer to our separate Report in "Annexure B".
(B) With respect to the other matters to be included in the Auditors Report in
accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion
and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations as at March 31, 2019 on
its financial position in its standalone financial statements - Refer Note 31 to the
standalone financial statements;
ii. the Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses;
iii. There has been no delay in transferring amounts, required to be transferred, to
the Investor Education and Protection Fund by the Company.
iv. The disclosures in the standalone financial statements regarding holdings as well
as dealings in specified bank notes during the period from 8 November 2016 to 30 December
2016 have not been made in these financial statements since they do not pertain to the
financial year ended March 31, 2019.
(C) With respect to the matter to be included in the Auditors Report under section
197(16):
In our opinion and according to the information and explanations given to us, the
remuneration paid by the company to its directors during the current year is in accordance
with the provisions of Section 197 of the Act. The remuneration paid to any director is
not in excess of the limit laid down under Section 197 of the Act. The Ministry of
Corporate Affairs has not prescribed other details under Section 197(16) which are
required to be commented upon by us.
for B S R & Co. LLP
Chartered Accountants
Firms Registration No.101248W/W-100022
K Raghuram
Partner
Membership No. 211171
ICAI UDIN: 19211171AAAAEJ8751
Place: Chennai
Date: November 8, 2019
Annexure A to the Independent Auditors report on the standalone financial statements
of Polaris Consulting & Services Limited for the period ended March 31, 2019
(Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements
section of our report of even date)
(i) 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 fixed assets are verified in a phased manner over a period of two years. In our
opinion, this periodicity of physical verification is reasonable having regard to the size
of the company and the nature of its assets. In accordance with this programme, certain
fixed assets were verified by the management during the year and no material discrepancies
were noticed on such verification.
c) according to the information and explanations given to us, and on the basis of our
examination of the records of the Company, the title deeds of immovable properties are
held in the name of the Company except in one case as under:
| Asset name |
Nature |
Gross block |
Net block |
|
|
(In lakhs) |
(In lakhs) |
| Land Hyderabad Manikonda |
Freehold |
4,028 |
4,028 |
(ii) the Company is a service company, primarily rendering software services.
According, as at March 31, 2019, it does not hold any physical inventories. Thus,
paragraph 3 (ii) of the Order is not applicable to the Company.
(iii) in our opinion and according to the information and explanations given to us, the
Company has not granted any loans, secured or unsecured, to companies, firms, limited
liability partnerships or other parties covered in the register maintained under section
189 of the Act. Accordingly, paragraph 3 (iii) (a), (b) and (c) of the Order are not
applicable to the Company.
(iv) in our opinion and according to the information and explanations given to us, the
Company has complied with the provisions of Section 186 of the Act with respect to the
investments made. The Company has not granted any loans or provided any guarantee or
security to the parties covered under Section 185 and 186 of the Act. Accordingly, to that
extent paragraph 3(iv) of the Order is not applicable to the Company.
(v) the Company has not accepted any deposits from the public within the meaning of the
directives issued by the Reserve Bank of India, provisions of Section 73 to 76 of the Act,
any other relevant provisions of the Act and the relevant rules framed thereunder.
(vi) the Central Government has not prescribed the maintenance of cost records under
section 148(1) of the Act, for any of the services rendered by the Company.
(vii) 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, Goods and Service tax, duty of Customs, Cess and other material
statutory dues have generally been regularly deposited during the year, by the Company
with the appropriate authorities though there has been a slight delay in few cases. As
explained to us, the Company did not have any dues on account of duty of Sales tax,
Service tax, Value added tax and duty of Excise.
According to the information and explanations given to us, no undisputed amounts
payable in respect of Provident Fund, Employees State Insurance, Income-tax, Goods and
Service tax, duty of Customs, Cess and other material statutory dues were in arrears as at
March 31, 2019 for a period of more than six months from the date they became payable. b)
according to the information and explanation given to us, there are no dues of Income tax,
Sales tax or Service tax or Goods and Service tax or duty of Customs or Value added tax
which have not been deposited with appropriate authorities on account of any disputes
other than the following dues:
| Name of the statue |
Nature of dues |
Amount disputed (INR in Lakhs) (Note 1) |
Period to which the amount relates (Assessment year) |
Forum where dispute is pending |
| Income tax Act, 1961 |
Income taxes |
10,053.13 |
2001-12 |
High Court of Madras |
| Income tax Act, 1961 |
Income taxes |
1,108.86 |
2005-06 and 2014-15 |
Income Tax Appellate Tribunal, Chennai |
| Income tax Act, 1961 |
Income taxes |
3,590.20 |
2012-14 and 2015-16 |
Commissioner of Income Tax (Appeals) |
| Income tax Act, 1961 |
Income taxes |
2,562.49 |
2007-08 |
Deputy Commissioner of Income Tax |
| The Tamil Nadu General Sales Tax Act, 1959 |
Sales taxes |
207.97 |
2004-05 |
High Court of Madras |
| Central Sales Tax Act, 1956 |
Central Sales Taxes (Note 2) |
42.40 |
2006-08 |
High Court of Andhra Pradesh |
| The Maharashtra Value Added Tax Act, 2002 |
Sales taxes (Note 2) |
66.89 |
2013-15 |
Deputy commissioner of Sales tax (Appeals) |
| The Harayana Value Added Tax Act, 2003 |
Sales taxes (Note 2) |
1,021.84 |
2013-15 |
Excise & Taxation Officer |
| The Finance Act, 1994 |
Service taxes |
100.55 |
2004-06 |
High Court of Madras |
Note 1: Does not include interest and penalty.
Note 2: The Company has also deposited a sum of INR 28.16 lakhs under protest
(viii) in our opinion and according to the information and explanations given to us,
the Company does not have any loans or borrowings from any financial institution, banks,
Government or debenture holders during the year. Accordingly, paragraph 3(viii) of the
Order is not applicable to the Company.
(ix) in our opinion and according to the information and explanations given to us, the
Company has not raised any money by way of initial public offer or further public offer
(including debt instruments) and term loans during the year. Accordingly, reporting under
paragraph 3(ix) of the Order is not applicable to the Company.
(x) according to the information and explanations given to us, no material fraud by the
Company or on the Company by its officers or employees has been noticed or reported during
the course of our audit.
(xi) according to the information and explanations given to us and based on our
examination of the records of the Company, the Company has paid/ provided for managerial
remuneration in accordance with the requisite approvals as per provisions of Section 197
read with schedule V of the Act.
(xii) in our opinion and according to the information and explanations given to us, the
Company is not a Nidhi company. Accordingly, paragraph 3(xii) of the Order is not
applicable to the Company.
(xiii) according to the information and explanations given to us and based on our
examination of the records of the Company, transactions with the related parties are in
compliance with section 177 and 188 of the Act, where applicable and details of such
transactions have been disclosed in the standalone financial statements as required by the
applicable accounting standards.
(xiv) according to the information and explanations give to us and based on our
examination of the records of the Company, the Company has not made any preferential
allotment or private placement of shares or fully or partly convertible debentures during
the year under review. Accordingly, paragraph 3 (xiv) of the Order is not applicable to
the Company.
(xv) according to the information and explanations given to us and based on our
examination of the records of the Company, the Company has not entered into any non-cash
transactions with directors or persons connected with them. Accordingly, paragraph 3(xv)
of the Order is not applicable to the Company.
(xvi) according to the information and explanations given to us, the Company is not
required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
for B S R & Co. LLP
Chartered Accountants
Firms Registration No.101248W/W-100022
K Raghuram
Partner
Membership No. 211171
ICAI UDIN: 19211171AAAAEJ8751
Place: Chennai
Date: November 8, 2019
Annexure B to the Independent Auditors report on the standalone financial statements
of Polaris Consulting & Services Limited for the period ended March 31, 2019.
Report on the internal financial controls with reference to the aforesaid standalone
financial statements under Clause (i) of Subsection 3 of Section 143 of the Companies Act,
2013
(Referred to in paragraph 1/A/g under Report on Other Legal and Regulatory
Requirements section of our report of even date)
Opinion
We have audited the internal financial controls with reference to financial statements
of Polaris Consulting & Services Limited ("the Company") as of March 31,
2019 in conjunction with our audit of the standalone financial statements of the Company
for the year ended on that date.
In our opinion, the Company has, in all material respects, adequate internal financial
controls with reference to financial statements and such internal financial controls were
operating effectively as at March 31, 2019, based on the internal financial controls with
reference to financial statements criteria established by the Company considering the
essential components of internal control stated in the Guidance Note on Audit of Internal
Financial Controls Over Financial Reporting issued by the Institute of Chartered
Accountants of India (the "Guidance Note").
Managements Responsibility for Internal Financial Controls
The Companys management and the Board of Directors are responsible for establishing
and maintaining internal financial controls based on the internal financial controls with
reference to financial statements criteria established by the Company considering the
essential components of internal control stated in the Guidance Note. These
responsibilities include the design, implementation and maintenance of adequate internal
financial controls that were operating effectively for ensuring the orderly and efficient
conduct of its business, including adherence to companys policies, the safeguarding of
its assets, the prevention and detection of frauds and errors, the accuracy and
completeness of the accounting records, and the timely preparation of reliable financial
information, as required under the Companies Act, 2013 (hereinafter referred to as
"the Act").
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal financial
controls with reference to financial statements based on our audit. We conducted our audit
in accordance with the Guidance Note and the Standards on Auditing, prescribed under
section 143(10) of the Act, to the extent applicable to an audit of internal financial
controls with reference to financial statements. Those Standards and the Guidance Note
require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether adequate internal financial controls with reference to
financial statements were established and maintained and whether such controls operated
effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of
the internal financial controls with reference to financial statements and their operating
effectiveness. Our audit of internal financial controls with reference to financial
statements included obtaining an understanding of such internal financial controls,
assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. The procedures
selected depend on the auditors judgement, including the assessment of the risks of
material misstatement of the standalone financial statements, whether due to fraud or
error.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the Companys internal financial controls with
reference to financial statements.
Meaning of Internal Financial controls with Reference to Financial Statements
A companys internal financial controls with reference to financial statements is a
process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A companys internal financial controls
with reference to financial statements include those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with
authorisations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorised acquisition, use, or
disposition of the companys assets that could have a material effect on the financial
statements.
Inherent Limitations of Internal Financial controls with Reference to Financial
Statements
Because of the inherent limitations of internal financial controls with reference to
financial statements, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may occur and not be
detected. Also, projections of any evaluation of the internal financial controls with
reference to financial statements to future periods are subject to the risk that the
internal financial controls with reference to financial statements may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
for B S R & Co. LLP
Chartered Accountants
Firms Registration No.101248W/W-100022
K Raghuram
Partner
Membership No. 211171
ICAI UDIN: 19211171AAAAEJ8751
Place: Chennai
Date: November 8, 2019
+91-9892691696
