INDEPENDENT AUDITOR'S REPORT
To the members of CRANES SOFTWARE INTERNATIONAL LIMITED
Report on the Audit of the Standalone Ind AS Financial Statements
Qualified Opinion
We have audited the accompanying Standalone Financial Statements of Cranes Software International Limited
("the Company"), which comprise the Balance Sheet as at March 31,2023, the Statement of Profit and Loss
(including Other Comprehensive Income), and the Statement of Cash Flows for the year ended on that date and
a summary of significant accounting policies and other explanatory information (hereinafter referred to as the
"Standalone Financial Statements").
In our opinion and to the best of our information and according to the explanations given to us except for the
effect of the matters described in the "Basis for Qualified Opinion" section of our report, the aforesaid Standalone
Financial Statements give the information required by the Companies Act, 2013 (the "Act") in the manner so
required and give a true and fair view in conformity with the Accounting Standards prescribed under section 133
of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting
principles generally accepted in India, of the state of affairs of the Company as at March 31,2023 and its loss,
total comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Qualification
We conducted our audit in accordance with the standards of auditing (SAs) specified under section 143(10) of
the Act. Our responsibilities under these standards are further described in the Auditor's Responsibilities for the
audit of the statement 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 (The ICAI) together with the ethical requirements
that are relevant to our audit of the financial statements under the provisions of the Act and the rules there under
and we have fulfilled our other ethical responsibilities in accordance with these requirements and the code of
ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our
opinion
1. The attached Balance Sheet as at 31st March, 2023 is drawn on the basis of the Principle of 'Going
Concern'. We opine as follows in this connection:
i. Due to Negative Net-worth and pending cases, it cast a significant uncertainty on the Company ability
to continue as a going concern, however the management is hopeful for recovery hence the financials
result prepared on going concern basis.
ii. Investment - As per Company accounting policy the Company has adopted fair value model to value
the investment, but the company has been continuously valued all investment at cost price. Due to
non-availability of current market value of investments we are unable to comment on the quantum of fair
value adjustments required by the company. Details of Investment and Net-worth is as follows.
iii. Expected credit loss: following assets are non-performing in nature hence As per IND AS 109 "Financials
instrument" the company needs to provide ECL by following lifetime ECL model.
iv. Legal proceedings u/s.138 of the Negotiable Instruments Act has been initiated by Bank of India.
v The Company has been defaulted in booking and payment of various statutory dues to various statutory
authorities.
vi. In our opinion the securities provided to Banks are not adequate to cover the amounts outstanding to
them as on the date of Balance Sheet.
vii. Loan availed by the company from 'UPS Capital Business Credit' remains unpaid and is overdue since
April 2014. The management is of the view that the liability of INR 696.37 lakhs (including interest)
reflected in the financial statements will adequately cover its liability on settlement of dues and therefore
no provision for interest is provided for the period ended 31st March, 2023.
viii. In continuation to the point 'vii' above, the company has also discontinued the restatement of the
Exchange fluctuation gain / loss on account of the outstanding due towards 'UPS Capital Business
Credit' and the interest due thereon, in line with the Ind AS-21 "The Effects of Changes in Foreign
Exchange Rates". Had such restatement of liability been made in the books in the normal course, the
present loss for the period ended 31st March,2023
ix. The banks which had extended financial facilities to the company have treated the outstanding from
the company as "Non-Performing Assets" since 2009. In order to achieve the desired congruency on
this issue, the Company has also not provided for interest amounting to INR 5050.28 lakhs on such
outstanding amounts for the period ended 31st March, 2023 due to various banks, though the
confirmation of such dues were not made available to us from the respective banks/financial institutions.
Had the said interest been provided in the books in the normal course, the present loss for the period
ended 31st March, 2023 would have been higher by INR 5050.28 lakhs.
x. Wilful defaulter: The bank of India has declared Company and promotors as "wilful defaulter".
xi. The management is in negotiation with the Foreign currency convertible bond holders for settling its
dues. The management is of the view that the liability of INR 38,695 lakhs (including interest amounting
to INR 9,610 lakhs) reflected in the financial statements will adequately cover its liability on settlement
of dues with the Foreign currency convertible bond holders and therefore no provision for interest is
provided for the period ended 31st March, 2023. Had such interest been provided in the books in the
normal course, the present loss for the period ended 31st March, 2023 would have been higher by INR
1654.73 lakh
xii. In continuation to the point 'xi' above, the company has also discontinued the restatement of the
Exchange fluctuation gain / loss on account of the outstanding due towards Foreign currency convertible
bond and the interest due thereon, in line with the IND AS-21 "The Effects of Changes in Foreign
Exchange Rates". Had such restatement of liability been made in the books in the normal course, the
present loss for the period ended 31st March, 2023 would have been higher by INR 1890.00 lakhs.
xiii. There are undisputed statutory dues including dues on current year's transactions, on account of
Provident Fund Contribution, Employee State Insurance, Income Tax, Service tax, Sales Tax, Goods
and Service tax, Dividend Distribution Tax and the like, not deposited by the Company in favour of the
respective statutory authorities.
xiv. The company has not complied with RBI guidelines since March 2011
Basis for Opinion
We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing
("SA"s) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described
in the Auditor's 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 ("ICAI") 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 made thereunder, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit
evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Standalone
Financial Statements.
Emphasis of Matter
The attached Balance Sheet as at 31st March, 2023 is drawn on the basis of the Principle of 'Going Concern'. We
opine as follows in this connection:
a. Redemption of Foreign currency convertible bond
Redemption of Foreign currency convertible bond amounting to INR. 29,085.00 lakhs (42 million Euros)
to the holders of the bonds have fallen due during April 2011 and is yet to be redeemed as on the date
of Balance Sheet. On a petition filed by the Foreign currency convertible bond holders, The Hon'ble
High Court of Karnataka issued a winding up order against the company, which indicates the existence
of material uncertainty that may cast significant doubt on the company's ability to continue as a going
concern.
b. Term loans and working capital loan availed by the company from Bank of India amounting to INR
39,006.21 lakhs remain unpaid and are overdue since 2009, remain unpaid and are overdue since 2009.
The lender has filed cases before the Debt Recovery Tribunal (DRT) / Hon'ble Courts, etc for recovery of
dues. These proceedings are in various stages of disposal before the "DRT" and the respective Hon'ble
Courts. Winding up petition has been filed by Bank of India against the company, before the Hon'ble
High Court of Karnataka for non-payment of principal and the accrued interest thereon.
c. In our opinion the securities provided to Banks are not adequate to cover the amounts outstanding to
them as on the date of Balance Sheet.
d. We would like to draw the attention of the members to note no. 25 of the standalone Ind AS Financial
Statements regarding default of payments to various statutory authorities.
e. We draw attention to Note No. 33 of the standalone Ind AS Financial Statements regarding the
investments (including receivables) made in wholly owned subsidiaries. As explained by the management,
it being a long term and strategic investment, there is a reasonable certainty that there will be no
diminution in the value of the investment and is confident of recovery of receivables and therefore no
provisioning has been considered necessary. The details of investments (including receivables) in
subsidiaries are as under.
f. The company had invested in the below mentioned wholly owned subsidiaries. Due to the cumulative
losses in the subsidiaries, the value of investment is eroded.
g. The company has not provided for diminution / impairment in the value of its investments in the above
wholly owned subsidiaries, as required by the IND AS-36.
h. The Company has drawn and utilized an amount INR 43.78 lakhs from the 'CSIL Employees
Comprehensive Gratuity Trust' fund for the purpose not intended in terms of 'The Payment of Gratuity
Act, 1972'.(See note No. 14 of the Financial Statements)
i. The company has provided for doubtful debts of INR 1,606.35lakhs during the year, towards due from a
subsidiary.
j. We would like to draw the attention of the members to note no. 22 of the financial statements regarding
write off of advance due from a subsidiary amounting to INR 4794.30 lakhs. The company has not
complied with the required permissions from the regulatory authorities towards the write off of advances.
k. We would like to draw the attention of the members to note no. 22 of the financial statements regarding
write back of advances due to a subsidiary amounting to INR 1660.35 lakhs. The company has not
complied with the required permissions from the regulatory authorities towards the write back of advances.
l. There are undisputed statutory dues including dues on current year's transactions, on account of
Provident Fund Contribution, Employee State Insurance, Income Tax, Service tax, Sales Tax, Goods
and Service tax, Dividend Distribution Tax and the like, not deposited by the Company in favor of the
respective statutory authorities.
m. Earnings in foreign exchanges are not realized within the periods stipulated under FEMA and permission
is awaited from the statutory authorities to write off the same.
n. The management is of the opinion that the all assets, investments have at least the value as stated in
the Balance Sheet, if realized in the ordinary course of business.
Our Report is not qualified in respect of the above matters.
Key Audit Matters(a) Adoption of Ind AS 115- Revenue from contracts with customers:
As described in note number 2B to the financial statements, the company has adopted Ind AS 115 Revenue
from Contracts with Customers which is the new accounting standard. Considering the nature of the industry,
where revenue is recognized on basis the terms of each contract with customers, these commercial
arrangements can be complex and significant judgments relating to identification of distinct performance
obligations, determination of transaction price of identified performance obligation and the appropriateness
of basis used to measure revenue recognized over the time period is applied in selecting the accounting
basis in each case. Additionally, new revenue accounting standard contains disclosures which involves
disaggregated revenue and periods over which the remaining performance obligations will be satisfied
subsequent to the balance sheet date.
(b) Assessment of the appropriateness of provisions recognized and contingent liabilities disclosed
in respect of certain tax matters
(Refer notes 27 of the standalone Ind AS financial statements and Annexure A of the Audit Report)
As at March 31,2023, the Company has significant tax exposures and is subject to periodic assessments/
challenges by tax authorities on transfer pricing, income tax and a range of indirect tax matters.
Consequent to such tax assessments and demands relating to past several years, the Company has paid
certain amounts under protest at various dates. The Company has also filed appeals with various appellate
authorities against such demands.
Management judgement is involved in assessing the likelihood of ultimate outcome of the tax disputes to
decide on the accounting/ disclosure requirements. In certain complex matters the probable amount of the
outflows determined by management is supported by opinions obtained from external tax counsels/ experts
(management tax experts).
We considered this a key audit matter as:
a. The amounts involved are significant to the standalone Ind AS financial statements
b. Change in the management's judgements and estimates may significantly affect the provisions
recognized or contingent liabilities disclosed
c. Matters of disputes are complex in some cases due to the industry in which the Company operates
and may lack clarity under tax laws.
How our audit addressed the key audit mattersOur responses:
We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard.
Our audit procedures to address the risk of material misstatement relating to revenue recognition includes
testing of design and operating effectiveness of controls and substantive procedures as follows:
a. Evaluated the design and operating effectiveness of internal controls relating to the implementation of new
revenue standard;
b. Evaluated detailed analysis performed by the management on each stream of revenue contracts.
c. Selected samples from all streams of contracts to carry out a detailed analysis on recognition of revenue as
per the five steps given in standard. Performed revenue transaction testing on samples selected from each
stream of revenue where each input to revenue recognition, including estimates
Our audit procedures included the following:
a. Understood, assessed and tested the design and operating effectiveness of the Company's controls in
respect of identifying potential tax exposures and/or the accounting and disclosures thereof.
b. Evaluated the related accounting policy for provisioning for tax exposures/ disclosure of contingent liabilities.
c. Obtained management's assessment in respect of tax demands on whether tax outflow is either probable,
possible or remote.
d. Along with the auditors' experts, where necessary, evaluated the management's assessment as follows:
o Read the correspondences received during the year from the tax authorities.
o Read views provided by the management, management tax experts as applicable.
o Assessed management's positions on significant tax exposures for reasonableness.
o Ensured completeness of litigations by inquiring with the management, review of board minutes, and
review of significant legal expenses.
o Evaluated the objectivity, competence and capabilities of the management tax experts
o Evaluated the adequacy of disclosures made in the standalone Ind AS financial statements.
Based on the above procedures, we considered the management's assessment in recognizing provisions and
disclosing contingent liabilities in respect of the stated tax matters, as reasonable.
Information Other than the Standalone Ind AS financial statements and Auditor's Report thereon
The Company's Board of Directors are responsible for the preparation of the other information. The other information
comprises the information included in the Board's Report including Annexures to Board's Report, Business
Responsibility Report but does not include the financial statements and our auditor's report thereon.
Our opinion on the 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 financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the accompanying financial
statements or our knowledge obtained during the course of our audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Management's Responsibility for the Standalone Ind AS financial statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act,
2013 ("the Act") with respect to the preparation of these standalone Ind AS 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 principles generally accepted in India, including the Accounting Standards specified under Section
133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 financial statements that give a true and fair view and are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's 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.
Those Board of Directors are also responsible for overseeing the Company's financial reporting process
Auditor's Responsibility on the accompanying Financial Statements
Our objective is to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor's 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 financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
a. Identify and assess the risks of material misstatement of the 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.
b. 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 Companies Act, 2013, we are also responsible
for expressing our opinion on whether the company has adequate internal financial controls system in
place and the operating effectiveness of such controls.
c. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
d. Conclude on the appropriateness of management's 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 Company's ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures
in the 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 auditor's report. However, future events or
conditions may cause the Company to cease to continue as a going concern.
e. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or aggregate
makes it probable that the economic decisions of a reasonably knowledgeable user of standalone financial
statement may be influenced. We consider quantitative materiality and quantitative factors in (i) planning the
scope of audit work and evaluating the results thereof; and (ii) to evaluate the effect of any identified misstatements
in standalone financial statements.
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.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the standalone financial statements of thecurrent period and are therefore the
key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public
disclosure about the matter or when, in extremelyrare circumstances, we determine that a matter should not
becommunicated in our report because the adverse consequencesof doing so would reasonably be expected to
outweigh the publicinterest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act, based on our audit 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 Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement
of Changes in Equity and the 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 Accounting Standards
specified under Section 133 of the Act.
e) Three out of four Directors of the company being directors of other companies which have not filed its
annual return with the Registrar of Companies for a period of more than 3 years as on the date of
Balance Sheet, leading to non-compliance and disqualification from being appointed as a director. The
Registrar of the Companies Karnataka had ordered for removal of directors in terms of Section 164(2) of
the Companies Act, 2013. The said directors have obtained an interim stay from the Hon'ble High Court
of Karnatakaon 26th of October 2018On the basis of the written representations received from the
directors as on March 31,2023 taken on record by the Board of Directors, none of the directors is
disqualified as on March 31,2023 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 over financial reporting of the Company
and the operating effectiveness of such controls, refer to our separate Report in "Annexure A". Our
report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's
internal financial controls over financial reporting.
g) With respect to the other matters to be included in the Auditor's Report in accordance with the
requirements of section 197(16) of the Act, as amended: In our opinion and to the best of our information
and according to the explanations given to us, the remuneration paid by the Company to its directors
during the year is in accordance with the provisions of section 197 of the Act.
h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of
the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our
information and according to the explanations given to us:
1) The Company has disclosed the impact of pending litigations on its financial position in its
Standalone Financial Statements.
2) The Company has made provision, as required under the applicable law or accounting standards,
for material foreseeable losses, if any, on long-term contracts including derivative contracts.
3) The Company was not required to transfer any amounts to the Investor Education and Protection
Fund.
4) (a) The Management has represented that, to the best of its knowledge and belief, no funds (which
are material either individually or in the aggregate) have been advanced or loaned or invested
(either from borrowed funds or share premium or any other sources or kind of funds) by the
Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the
understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether,
directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever
by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the
like on behalf of the Ultimate Beneficiaries;
(b) The Management has represented, that, to the best of its knowledge and belief, no funds
(which are material either individually or in the aggregate) have been received by the Company
from any person or entity, including foreign entity ("Funding Parties"), with the understanding,
whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly,
lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of
the Ultimate Beneficiaries;
(c) Based on the audit procedures that have been considered reasonable and appropriate in the
circumstances, nothing has come to our notice that has caused us to believe that the
representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above,
contain any material misstatement.
2. As required by the Companies (Auditor's Report) Order, 2020 (the "Order") issued by the Central Government
in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in
paragraphs 3 and 4 of the Order.
For Chaturvedi Sohan & Co
Chartered Accountants
Registration No.118424W
Noshir Captain
Partner
Membership No.009889
October 25, 2023 UDIN : 23009889BGWUYK5714
Bengaluru
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