Intellect Design Arena Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of Intellect Design Arena Limited (“the Company"), which comprise the Standalone Balance Sheet as at March 31, 2025, and the Statement of Profit and Loss, including Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including material accounting policy information 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 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 Indian Account ing Standards prescribed under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended (“Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2025, and profit (including other comprehensive Income), changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) 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 thereunder, and we have fulfil led 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.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the standalone financial statements for the year ended March 31, 2025. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report:
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Key audit matters
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How our audit addressed the key audit matter
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Accounting for License and Implementation Contracts
Revenue from License and Implementation Contracts were considered significant because of its pervasive impact on the financial statements and risk related to management judgments involved in identification of various performance obligation, fair value allocation of transaction price to all performance obligation measurement, timing and presentation/disclosure of Revenue from Operations
The Company enters into contracts with its customers that may include multiple performance obligations. For these contracts, the Company assesses the performance obligations and accounts for those obligations separately if they are distinct. The identification and the allocation of the transaction price to the different performance obligations and the appropriateness of the basis used to measure revenue recognised at a point in time or over a period, require management to use significant judgement and estimates.
Refer to note 3(k) to the Standalone Financial Statements
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Our audit procedures in respect of this area included
1. Obtained an understanding of the systems, process and controls implemented by management for measurement and recognition of revenue related to License and implementation contracts and associated contract asset and liabilities
2. Read through the Company's accounting policy and assessed in line with applicable Indian Accounting Standards.
3. Performed walkthroughs of each significant class of revenue transactions and assessed the effectiveness of relevant controls
4. For revenue related to license contracts which is recognised at a point in time, on sample basis, we read through the customer contract and
- Evaluated the appropriateness and reasonableness of management assessment of identification of distinct performance obligation and fair value allocation of transaction price to each performance obligation.
- Ensured transaction price allocated for license contracts is recognised only after satisfaction of all performance obligation.
- Examined the proof of delivery for the license to customer
- Read the contracts and assessed potential impact of any unusual clause on revenue recognition.
- Performed cut off procedures by reference to the contract and evidence of delivery.
5. For Licenses and services where control is transferred over a period of time, on sample basis,
- Read the contract and based on the terms and conditions evaluated whether recognizing revenue over time using percentage-of-completion method was appropriate, and the contract was included in management's calculation of revenue over time
- Evaluated the appropriateness and reasonableness of management assessment of fair value allocation of transaction price towards performance obligation for Implementation contracts.
- Examined the detailed breakup of stage of completion at each activity level
- Evaluated the appropriateness of and consistency in the application of management's policies and methodologies to estimate progress towards satisfying the performance obligation.
- Recomputed the revenue recognised based on allocated transaction price and percentage of completion.
6. Assessed the disclosure made in the financial statement in accordance with INDAS 115.
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Capitalisation and Valuation of Intangible Assets and Intangible Asset under Development
Intangible Asset and Intangible asset under development are deemed significant to our audit, as specific criteria that need to be met for capitalisation. This involves management judgment, such as technical feasibility, intention and ability to complete the intangible asset, ability to use or sell the asset, generation of future economic benefits and the ability to measure the costs reliably.
In addition, determining whether there is any indicator of impairment of the carrying value of asset, requires management judgement and assumptions which are affected by future market or economic developments.
Refer to notes 3(g) and 3(i) to the Standalone Financial Statements
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Our audit procedures in respect of this area included
1. Obtained an understanding of the systems, process and controls implemented by management for recording and measuring Intangible Asset and Intangible Asset under development.
2. Read through the Company's accounting policy and related disclosures and assessed in line with applicable Indian Accounting Standards.
3. Assessed design, implementation and operating effectiveness of key controls in respect of recognition and classification of development expenditure, and evaluation of existence of any impairment
4. On Sample basis, validated the measurement principles and accuracy of cost capitalised and reasonableness of same and management intention to complete the capitalised projects.
5. We evaluated the assumptions and methodology used by the Company to test the Intangible asset and Intangible asset under development for impairment.
6. Tested the amortisation charge and estimate of useful life of Intangible asset.
7. Assessed and validated the adequacy and appropriateness of the disclosures made by the management in the financial statements
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Recoverability of Accounts Receivables and Contract Asset
Recoverability of account receivables and contract assets are considered material and there are significant judgments involved in assessing recoverability and recognition of expected credit loss allowance for accounts receivables and contract asset balances.
Significant judgements are involved in concluding that a balance needs to be impaired including default or delinquency in payments, length of the outstanding balances and implementation difficulties.
Given the complexity, the size and the length of certain implementation projects, there is risk that a provision is not recognised in a timely or sufficient manner.
Refer note 3 (t) of the Standalone Financial Statements.
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Our audit procedures in respect of this area included
1. Obtained understanding of management process and controls implemented by management for measurement and recognition for expected credit loss allowance.
2. Examined the management's measurement and recognition of expected credit loss allowance and reasonableness of underlying management's analysis on recoverability of accounts receivables and accrued revenue balances for all significant cases. This analysis includes past trend, background information of the customer, existing contractual relationships, balance outstanding, delays in collection, and operational reasons and summaries of discussions with customers and collection plans together with a detailed legal analysis where applicable.
3. Recomputed the ageing of accounts receivables, accrued revenue balances and circularised confirmations based on random sampling and verified subsequent collections from recoverability perspective. Performed test of alternate nature in cases where confirmation has not been responded to by the customer.
4. Evaluated the recoverability of accounts receivable and contract asset selected balances through discussions with project managers and with senior management when necessary.
5. Assessed and validated the adequacy and appropriateness of the disclosures made by the management in the financial statements.
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Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in Director's report, Management Discussion & Analysis, Report on Corporate governance, General Shareholders information and Business responsibility and Sustainability Report but does not include the standalone financial statements and our auditor's report thereon.
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. 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. Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Company's 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 financial position, financial performance, changes in equity 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. 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 statement 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, the Management and Board of Directors are 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditor's 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 auditor's report that includes our opinion. Reasonable assura nce 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.
We give in “Annexure A" a detailed description of Auditor's responsibilities for Audit of the Standalone Financial Statements.
Other Matter:
The standalone financial statements of the Company for the year ended March 31, 2024, was audited by another auditor whose report dated May 09, 2024 expressed an unmodified opinion on those financial statements.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2020 (“the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in “Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. 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 except for the matters stated in the paragraph 2(h)(vi) below on reporting under Rule 11(g).
(c) The Balance Sheet, the Statement of Profit and Loss including other comprehensive income, the Statement of Changes in Equity and the Statement of Cash Flow 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) On the basis of the written representations received from the directors as on March 31, 2025 taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2025 from being appointed as a director in terms of Section 164 (2) of the Act.
(f) The reservation relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph (b) above on reporting under Section 143(3)(b) and paragraph 2(h)(vi) below on reporting under Rule 11(g)
(g) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure C".
(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit a nd 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 on its financial position in its standalone financial statements - Refer note 32 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.
a. The Management has represented that, to the best of its knowledge and belief, as disclosed in Note 45 to the Standalone Financial Statements, no funds 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(s) or entity(ies), including foreign entities (“Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, 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, as disclosed in Note 45 to the Standalone Financial Statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (Funding Parties), with the understanding, whether recorded in writing or otherwise, as on the date of this audit report, that the Company shall, 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 performed that have been considered reasonable and appropriate in the circumstances, and accord ing to the information and explanations provided to us by the Management in this regard 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 (1) and (2) above, contain any material mis-statement.
iv. The final dividend paid by the Company during the year in respect of the same declared for the previous year is in accordance with section 123 of the Companies Act 2013 to the extent it applies to payment of dividend.
v. The Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the membe rs at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend. (Refer note (13h) to the Standalone financial statements)
Based on our examination, the Company has used two accounting software for maintaining its books of account during the year ended March 31, 2025
One of the software which is used by the company for recording revenue has a feature of recording audit trail (edit log) faci lity, except that audit trail feature was enabled at the database level only from July 30, 2024 in respect of the software to log any direct data changes.
Another software which is used by the company for bookkeeping purposes, has a feature of recording audit trail (edit log) facility, except that no audit trail feature was enabled at the database level from April 1, 2024 till September 20, 2024 in respect of the software to log any direct data changes.
Further, the audit trail facility has been operated throughout the year for all relevant transactions recorded in the accounting software, except for the software at the database level as stated above, in respect of which the audit trail facility has not operated throughout the year for all relevant transactions recorded in this accounting software as it was enabled only with effect from July 30, 2024 and September 20, 2024 respectively.
Further, during the course of our examination, we did not come across any instance of audit trail feature being tampered with, post enablement of the audit trail facility
3. In our opinion, according to information, explanations given to us, the remuneration paid by the Company to its directors is within the limits laid prescribed under Section 197 of the Act and the rules thereunder.
For M S K C & Associates LLP (Formerly known as M S K C & Associates)
Chartered Accountants
ICAI Firm Registration Number: 001595S/S000168
Geetha Jeyakumar
Partner
Membership No. 029409 UDIN: 25029409BMMIOW5219
Place of Signature: Chennai Date: May 09, 2025
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