Covance Softsol’s US unit accounts rely on management review

Covance Softsol Limited’s consolidated limited review for the half year ended September 30, 2026 relied on management-reviewed and certified interim accounts of its US subsidiary, Softsol Resources Inc., rather than accounts reviewed by that subsidiary’s auditors. The subsidiary reported Rs 269.06 crore of assets, Rs 34.56 crore of half-year revenue and Rs 7.36 crore of profit after tax.

What did Covance Softsol’s auditor disclose about the US subsidiary?

Covance Softsol’s auditor disclosed that it did not review Softsol Resources Inc.’s interim financial information for the quarter and half year ended September 30, 2026. The US business is a wholly owned subsidiary, and its results were reviewed and certified by the subsidiary’s management before being furnished to the statutory auditor.

Pavuluri & Co. said its conclusion on the consolidated results, insofar as it relates to the subsidiary’s amounts and disclosures, was based solely on management-provided results and the procedures it performed. The consolidated review report was dated November 10, 2026, the same day Covance Softsol’s board approved unaudited standalone and consolidated results.

The report was conducted under Standard on Review Engagements 2410, which covers a review of interim financial information by an entity’s independent auditor. It says a limited review principally involves inquiries and analytical procedures and is substantially narrower than an audit conducted under the Companies Act, 2013.

The auditor issued an unmodified conclusion on the consolidated half-year statement. It said nothing had come to its attention to indicate that the statement for April 1, 2026 to September 30, 2026 did not meet the disclosure requirements of Regulation 33 of the Securities and Exchange Board of India’s Listing Obligations and Disclosure Requirements Regulations, 2015.

How significant was Softsol Resources Inc. in Covance Softsol’s results?

Softsol Resources Inc. reported total assets of Rs 269.06 crore at September 30, 2026, against Covance Softsol’s consolidated assets of Rs 299.69 crore. The subsidiary’s assets were therefore substantially represented in the group balance sheet included in the limited-review statement.

For the half year ended September 30, 2026, the subsidiary recorded revenue of Rs 34.56 crore and profit after tax of Rs 7.36 crore. Covance Softsol reported consolidated revenue from operations of Rs 57.36 crore and consolidated profit after tax of Rs 19.52 crore for the same six-month period.

For the quarter ended September 30, 2026, Softsol Resources Inc. reported revenue of Rs 17.13 crore, profit after tax of Rs 0.99 crore and total comprehensive income of Rs 1.54 crore. Its total comprehensive income for April 1, 2026 to September 30, 2026 was Rs 27.25 crore.

The subsidiary also reported a net cash outflow of Rs 3.70 crore for the six months ended September 30, 2026. The filing gives this figure in the auditor’s disclosure but does not include a separate subsidiary cash-flow statement reviewed by the subsidiary’s auditors.

How did Covance Softsol’s consolidated half-year performance change?

Covance Softsol’s consolidated revenue from operations declined to Rs 57.36 crore in the half year ended September 30, 2026 from Rs 66.45 crore in the corresponding period a year earlier. Despite the lower operating revenue, consolidated profit after tax rose to Rs 19.52 crore from Rs 15.46 crore.

Other income increased to Rs 18.92 crore from Rs 3.25 crore, while total income rose to Rs 76.29 crore from Rs 69.69 crore. The filing presents other income as a separate line item but does not provide a separate explanation for its year-on-year increase.

Total consolidated expenses increased to Rs 50.84 crore from Rs 49.47 crore. As a result, profit before tax was Rs 25.45 crore for the latest half year, compared with Rs 20.22 crore in the half year ended September 30, 2025.

Covance Softsol reported a single operating segment, IT/ITES, under Indian Accounting Standard 108, Operating Segments. The financial results therefore do not separate revenue, costs or profit between further business segments for the six-month period.

What does the limited-review conclusion cover?

Covance Softsol received an unmodified limited-review conclusion, not an audit opinion, for its consolidated results for the half year ended September 30, 2026. The auditor stated that its review covered inquiries of personnel responsible for financial and accounting matters alongside analytical and other review procedures.

The conclusion includes the group’s consolidated statement, but the auditor expressly distinguished its treatment of Softsol Resources Inc. It did not independently review the subsidiary’s interim information containing Rs 269.06 crore of assets and instead relied on management-certified figures supplied to it.

The auditor also said it performed procedures required by the applicable Securities and Exchange Board of India circular under Regulation 33(8). Its conclusion was not modified because of the reliance on management-certified subsidiary information.

This means the disclosed basis for the conclusion differs between the parent-level information subjected to the auditor’s review procedures and the subsidiary information certified by management. The filing does not state that Softsol Resources Inc.’s September 2026 interim accounts received a separate audit or limited review from that subsidiary’s auditors.

How did Covance Softsol’s consolidated balance sheet move?

Covance Softsol’s consolidated total assets increased to Rs 299.69 crore at September 30, 2026 from Rs 279.95 crore at March 31, 2026. Current investments rose to Rs 240.94 crore from Rs 205.14 crore over the same period.

Cash and cash equivalents declined to Rs 3.79 crore at September 30, 2026 from Rs 9.56 crore at March 31, 2026. Consolidated trade receivables also declined to Rs 23.07 crore from Rs 34.71 crore.

Total equity increased to Rs 210.01 crore from Rs 168.67 crore, while other equity rose to Rs 187.86 crore from Rs 146.52 crore. Current borrowings increased to Rs 51.58 crore from Rs 41.18 crore.

Total current liabilities were Rs 73.06 crore at September 30, 2026, compared with Rs 68.75 crore at the preceding year-end. Non-current liabilities declined to Rs 16.62 crore from Rs 42.53 crore, according to the consolidated statement of assets and liabilities.

Conclusion

Covance Softsol’s November 10, 2026 filing shows that management-certified interim accounts of Softsol Resources Inc. formed part of the basis for the consolidated limited-review conclusion. That reliance concerns a subsidiary with Rs 269.06 crore of assets and Rs 34.56 crore of half-year revenue, while group operating revenue declined year on year to Rs 57.36 crore.

The next results will show whether Softsol Resources Inc. again reports management-certified interim information after its Rs 3.70 crore half-year cash outflow. The filing also leaves investors to track the movement in Covance Softsol’s cash balance, which was Rs 3.79 crore at September 30, 2026, and current borrowings, which were Rs 51.58 crore.