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SONATA SOFTWARE LTD.

21 August 2025 | 12:00

Industry >> IT Consulting & Software

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ISIN No INE269A01021 BSE Code / NSE Code 532221 / SONATSOFTW Book Value (Rs.) 53.51 Face Value 1.00
Bookclosure 08/08/2025 52Week High 697 EPS 15.14 P/E 24.90
Market Cap. 10576.22 Cr. 52Week Low 286 P/BV / Div Yield (%) 7.05 / 1.17 Market Lot 1.00
Security Type Other

AUDITOR'S REPORT

You can view full text of the latest Director's Report for the company.
Year End :2025-03 

We have audited the standalone financial statements of Sonata Software Limited (the "Company"), its employee
welfare trust which comprise the standalone balance sheet as at 31 March 2025, 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 material accounting policies and other explanatory information [in which are included the financial
information of 4 branches].

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 31 March 2025, and 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 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 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 on the standalone financial statements.

Key Audit Matter(s)

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the standalone financial statements of the current period. 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.

Revenue recognition - Fixed Price contracts where revenue is recognized using percentage of
completion method

See Note 2.2 (l) and 23 to standalone financial statements

The key audit matter

How the matter was addressed in our audit

The Company enters into fixed-price arrangements,
where, revenue is recognized using percentage of
completion computed as per input method based on
the Company's estimate of contract efforts.

We identified revenue recognition of fixed-price
contracts where the percentage of completion is used,
as a key audit matter, since:

• there is an inherent risk around the accuracy and
existence of revenues recognised considering the
complex nature of these contracts and significant
inputs used in their accounting;

Our audit procedures included the following:

• Assessed the appropriateness and compliance of
theCompany's revenue recognition, accounting
policies in relation to the applicable accounting
standards.

• Tested the design, implementation and operating
effectiveness of the processes and controls
over recognition of revenue over a period of
time, the status of completion for projects and
management's estimates of total efforts on
contracts.

Revenue recognition - Fixed Price contracts where revenue is recognized using percentage of
completion method

See Note 2.2 (l) and 23 to standalone financial statements

The key audit matter

How the matter was addressed in our audit

• application of revenue recognition accounting
standard (Ind AS 115, Revenue from Contracts
with customers) is complex and involves a
number of key judgments and estimates in
mainly identifying performance obligations,
related transaction price and estimating the
future efforts-to- completion of these contracts,
which is used to determine the percentage

of completion of the relevant performance
obligation.

• quantum of fixed-price contracts and the
inherent risks associated with revenues for the
Company.

• On statistically selected samples of contracts,
evaluated the identification of performance
obligation and the determination of transaction
price.

• Recalculated the percentage of completion based
on the latest budgeted final efforts and the total
actual efforts incurred till date on the statistically
selected samples of contracts.

• We observed that the estimates of efforts to
complete were reviewed and approved by
appropriate levels of management.

• We performed tests on whether actual efforts
have been recorded in the correct period, by
testing the underlying evidences for statistically
selected samples.

• Assessed the adequacy and appropriateness of
the disclosures made in the standalone financial
statements in compliance with the requirements
of Ind AS 115: "Revenue from Contracts with
Customers".

Other Information

The Company's Management and Board of Directors are responsible for the other information. The other
information comprises the Director's report, but does not include the financial statements and auditor's
report thereon, which we obtained prior to the date of this auditor's report, and the remaining sections of the
Company's annual report, which is expected to be made available to us after that date.

Our opinion on the standalone financial statements does not cover the other information and we do not and will
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 identified above 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 on the other information that we obtained prior to the date of this
auditor's report, 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.

When we read the remaining sections of the annual report (other than the Director's 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 applicable under the relevant laws and regulations.

Management’s and Board of Directors’/Board of Trustees’ Responsibilities 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 state of affairs, profit/ loss 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. The respective Management and Board
of Directors of the Company/Board of Trustees of the employee welfare trust ("Trust") are responsible for
maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding
of the assets of Company/trust 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, the respective Management and Board of Directors/Board of
Trustees are responsible for assessing the ability of company/trust to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern basis of accounting unless the
respective Board of Directors/Board of Trustees either intends to liquidate the Company/trust or to cease
operations, or has no realistic alternative but to do so.

The respective Board of Directors /Board of Trustees are responsible for overseeing the financial reporting
process of each Company/trust.

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 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)0) 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 the Management and Board of Directors.

• Conclude on the appropriateness of the Management and Board of Directors use of the going concern
basis of accounting in preparation of standalone financial statements 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 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 auditor's 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.

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 the current period and are therefore the
key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.

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 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.

2 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 except for the matters stated in the paragraph
2B(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

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 31 March 2025, 01
April 2025, 08 April 2025 and 10 April 2025 taken on record by the Board of Directors, none of
the directors is disqualified as on 31 March 2025 from being appointed as a director in terms of
Section 164(2) of the Act.

f. the reservations relating to the maintenance of accounts and other matters connected therewith
are as stated in the paragraph 2A(b) above on reporting under Section 143(3)(b) of the Act and
paragraph 2B(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors)

Rules, 2014.

g. 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 Auditor's 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:

a. The Company has disclosed the impact of pending litigations as at 31 March 2025 on its financial
position in its standalone financial statements - Refer Note 24 to the standalone financial
statements.

b. 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 -
Refer Note 28 to the standalone financial statements.

c. There has been no delay in transferring amounts, required to be transferred, to the Investor
Education and Protection Fund by the Company.

d (i) The management has represented that, to the best of its knowledge and belief, as disclosed in
the Note 43 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.

(ii) The management has represented that, to the best of its knowledge and belief, as disclosed
in the Note 43 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, 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.

(iii) 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 (i) and (ii) above,
contain any material misstatement.

e. 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 Act, to the extent it applies to payment of dividend.

As stated in Note 38 to the Standalone financial statements, the Board of Directors of the
Company has proposed final dividend for the year which is subject to the approval of the
members 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.

f. Based on our examination which included test checks except for the instances mentioned below,
the Company has used accounting softwares for maintaining its books of accounts, which have a
feature of recording audit trail (edit log) facility and the same has operated throughout the year
for all relevant transactions recorded in respective softwares :

In the absence of sufficient and appropriate reporting on compliance with audit trail requirements
in the independent auditor's report of the service organization used at the database layer level
for the primary accounting software used for maintaining books of accounts, we are unable to
comment whether the audit trail feature and its preservation as per the statutory requirements
of the record retention for the said software was enabled and operated throughout the year at
database layer for all relevant transactions recorded in such software.

Additionally, based on our examination, where audit trail (edit log) facility was enabled and
operated in the previous year at the application layer, the audit trail has been preserved by the
Company from the date of enablement as per the statutory requirements for record retention.

In the absence of sufficient and appropriate reporting on compliance with audit trail requirements
in the independent auditor's report of the service organization used at the database layer level
for the software relating to recording of time by the Company's resources as part of the Revenue
process, we are unable to comment whether the audit trail feature and its preservation as per the
statutory requirements of the record retention for the said software was enabled and operated
throughout the year at database layer for all relevant transactions recorded in such software.

Additionally, based on our examination, where the audit trail (edit log) facility was enabled and
operated in the previous year at the application layer, the audit trail has not been preserved by
the Company as per the statutory requirements for record retention.

Further, for the periods where audit trail (edit log) facility was enabled and operated for the
respective accounting software, we did not come across any instance of the audit trail feature
being tampered with.

C. With respect to the matter to be included in the Auditor's Report under Section 197(16) of the Act:

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 by the Company 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) of the Act which are required to be commented upon by us.

For B S R & Co. LLP

Chartered Accountants
Firm's Registration No.:101248W/W-100022

Amrit Bhansali

Partner

Place: Mumbai Membership No.: 065155

Date: 07 May 2025 ICAI UDIN:25065155BMLBXQ3591