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Auditor Report of Frontier Informatics Ltd.

Mar 31, 2010

We have audited the attached balance sheet of M/s FRONTIER INFORMATION TECHNOLOGIES LIMITED, as at 31.03.2010, the profit and loss account and also the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

1) We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit including examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

2) As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose the Annexure, a statement of the matters specified in paragraphs 4 and 5 of the said Order.

3) Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

(ii) In our opinion, proper books of accounts as required by law have been kept by the company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us. The branch Auditors Reports have been forwarded to us and have been appropriately dealt with.

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by mis report are in agreement with the books of account.

(iv) In our opinion, the Balance Sheet, Profit and Loss account and Cash Flow statement dealt with by this report comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956;

On the basis of written representations received from the Directors, as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2010, from being appointed as a Director in terms if clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. In the case of Balance Sheet, of the state of affairs of the company as at 31st March 2010,

b. In the case of Profit and Loss Account, of the Profit/Loss for the year ended on that date.

c. In the case of Cash Flow statement, of the Cash Flows for the year ended on that date.

ANNEXURE TO AUDITORS REPORT

Ref: FRONTIER INFORMATION TECHNOLOGIES LIMITED

(Referred to in paragraph 3 of our report of even date.)

1) (a) The company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) All the Assets have been physically verified by the management during the year and there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) During the year, the company has disposed off major part of fixed assets representing Land & Building owned by the company along with furniture and AC plant attached thereto. The company continues to be engaged in business of software development.

2) The Company is engaged in software services and does not have any inventory; therefore clause (ii) of CARO does not apply.

3) a) As the company has not granted any loans to the parties covered in the register maintained under section 301 of the Companies Act, Clause (iii) (a), (b), (c) and (d) of Para 4 of the order does not apply.

b) The company had taken loan from an associated company covered in the register maintained under section 301 of the Companies Act, 1956, during earlier years amounting to Rs. 19.68 lakhs and the company has not repaid the same

c) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans granted are not prima facie prejudicial to the interest of the company.

4) In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of fixed assets and with regard to the sale of software products. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control.

5) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, no transactions are made in pursuance of contracts or arrangements which need to be entered in the register maintained under section 301 of the Companies Act, 1956 exceeding the value of rupees five lakhs in respect of any party during the year.

6) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits as per the provisions of the Companies (Acceptance of Deposits) Rules, 1975.

7) In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

8) In our opinion and according to the information and explanations given to us, the Central Government has not prescribed for the maintenance of cost records under section 209(l)(d) of the Companies Act, 1956.

9) (a) The company obtained sanction for payment of Provident Fund dues pertaining to earlier years by installments. An amount of Rs 16,800 remains payable as at the end of the year. Other statutory dues payable are:

Professional Tax dues Rs. 86,060

Others Rs 18,40,708

(b) According to the information and explanation given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31.03.2010 for a period of more than six months from the date they became payable excepting undisputed dividend tax payable by the company amounting to Rs.9,75,000/- as on that date.

(c) According to the information and explanation given to us, there are no dues of customs duty, wealth tax, sales tax, excise duty and cess which have not been deposited on account of any dispute except disputed income tax dues of Rs 13,39,917/ outstanding as at 31.03.2010 for a period of more than six months.

10) The accumulated losses of the company are not more than fifty percent of its net worth. The company has incurred cash loss of Rs 63.29 lakhs during the current year (Previous Year Rs ( 7.12 lakhs).

11) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to any scheduled Bank.

12) We are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares debentures and other securities.

13) We are of the opinion that the company is not a chit fund or a nidhi mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

14) In our opinion the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

15) In our opinion, the company has not given any guarantee for loans taken by others from banks or financial institutions.

16) In our opinion, the company has not raised any term loan(s) during the year..

17) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment. No long-term funds raised have been used to finance short-term assets except permanent working capital.

18) According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

19) According to the information and explanations given to us, during the period covered by our audit report, the company had not issued any debentures.

20) According to the information and explanations given to us, during the period covered by our audit report, the company has not raised any funds through public issue.

21) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

for T.P.RAO & CO.,

CHARTERED ACCOUNTANTS

Place: Hyderabad

Date: 01.09.2010 [ T. PRASADA RAO]

PROPRIETOR

ICAI MS. NO. 19196.


Mar 31, 2009

We have audited the attached balance sheet of M/s FRONTIER INFORMATION TECHNOLOGIES LIMITED, as at 31.03.2009, the profit and loss account and also the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

1) We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit including examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

2) As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose the Annexure, a statement of the matters specified in paragraphs 4 and 5 of the said Order.

3) Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of our

knowledge and belief were necessary for the purpose of our audit;

(ii) In our opinion, proper books of accounts as required by law have been kept by the

company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us. The branch Auditors Reports have been forwarded to us and have been appropriately dealt with.

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account.

(iv) In our opinion, the Balance Sheet, Profit and Loss account and Cash Flow statement dealt with by this report comply with the Accounting Standards referred to in Sub- section (3C) of Section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the Directors, as on 31st March,

2009 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2009, from being appointed as a Director in terms if clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. In the case of Balance Sheet, of the state of affairs of the company as at 31st March 2009,

b. In the case of Profit and Loss Account, of the Profit/Loss for the year ended on that date.

c. In the case of Cash Flow statement, of the Cash Flows for the year ended on that date.

Ref: FRONTIER INFORMATION TECHNOLOGIES LIMITED (Referred to in paragraph 3 of our report of even date.)

1) (a) The company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) All the Assets have been physically verified by the management during the year and there is a regular program of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) During the year, the company has not disposed off a major part of the plant and machinery.

2) The Company is engaged in software services and does not have any inventory; therefore clause (ii) of CARO does not apply.

3) a) As the company has not granted any loans to the parties covered in the register maintained under section 301 of the Companies Act, Clause (iii) (a), (b), (c) and (d) of Para 4 of the order does not apply.

b) The company had taken loan from an associated company covered in the register maintained under section 301 of the Companies Act, 1956, during earlier years amounting to Rs. 19.68 lakhs and the company has not repaid the same. Total amount outstanding as on 31.03.2009 payable to the parties covered in the register was Rs. 24.76 lakhs.

c) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans granted are not prima facie prejudicial to the interest of the company.

4) In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of fixed assets and with regard to the sale of software products. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control.

5) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, no transactions are made in pursuance of contracts or arrangements which need to be entered in the register maintained under section 301 of the Companies Act, 1956 exceeding the value of rupees five lakhs in respect of any party during the year.

6) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits as per the provisions of the Companies (Acceptance of Deposits) Rules, 1975.

7) In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

8) In our opinion and according to the information and explanations given to us, the Central Government has not prescribed for the maintenance of cost records under section 209(l)(d) of the Companies Act, 1956.

9) (a) The company obtained sanction for payment of Provident Fund dues pertaining to earlier years by installments. An amount of Rs 2,43,480 remains payable as at the end of the year. Other statutory dues payable are :

Professional Tax dues Rs. 76,375

Others Rs 10,94,975

(b) According to the information and explanation given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31.03.2009 for a period of more than six months from the date they became payable excepting undisputed dividend tax payable by the company amounting to Rs.9,75,000/- as on that date.

(c) According to the information and explanation given to us, there are no dues of customs duty, wealth tax, sales tax, excise duty and cess which have not been deposited on account of any dispute except disputed income tax dues of Rs 13,39,917/- outstanding as at 31.03.2009 for a period of more than six months.

10) In our opinion, the accumulated losses of the company are not more than fifty percent of its net worth. The company has incurred cash loss of Rs 6.41 lakhs during the current year (Previous Year Rs 37.62 lakhs).

11) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to any scheduled Bank

12) We are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares debentures and other securities.

13) We are of the opinion that the company is not a chit fund or a nidhi mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

14) In our opinion the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

15) In our opinion, the company has not given any guarantee for loans taken by others from banks or financial institutions.

16) In our opinion, the company has not raised any term loan(s) during the year..

17) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment. No long-term funds raised have been used to finance short-term assets except permanent working capital.

18) According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

19) According to the information and explanations given to us, during the period covered by our audit report, the company had not issued any debentures.

20) According to the information and explanations given to us, during the period covered by our audit report, the company has not raised any funds through public issue.

21) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

for T.P.RAO & CO., CHARTERED ACCOUNTANTS

Place: Hyderabad Date: 01.09.2009 [T.PRASADA RAO] PROPRIETOR ICAI MS.NO. 19196.

 
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