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Auditor Report of IO System Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of IO System Limited ('the Company'), which comprise the balance sheet as at 31 March 2015, the statement of profit and loss and the cash flow statement for the year ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the 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 and presentation of these 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 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the 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 2015 and its losses and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in the paragraph 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;

(c) the balance sheet, the statement of profit and loss and the cash flow statement dealt with by this Report are in agreement with the books of account;

(d) in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) on the basis of the written representations received from the directors as on 31 March 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015 from being appointed as a director in terms of Section 164 (2) of the Act; and

(f) 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:

i) the company does not have any pending litigations which would impact its financial position.

ii) the company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii) there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the company.

ANNEXURE REFERRED TO IN PARAGRAPH OF OUR REPORT OF EVEN DATE

The comments are in seriatim of the order

(i) (a) The company is maintaining proper records of its Fixed Assets showing full particulars including quantitative details and situation thereof.

(b) As informed, the fixed assets were physically verified by the management at reasonable intervals. No discrepancy on such verification noticed by the management and reported to us.

(ii) (a) The company is carrying non moving inventories valuing Rs. 2.25 lacs which have been physically verified at the year-end by the management. A provision of Rs. 2.00 lacs had already been made for diminution in value/ obsolesce.

(b) The procedures followed by the management were reasonable.

(c) The company is maintaining proper records of inventory. No discrepancy noticed on verification.

(iii) As per the information and explanations given to us and certified by the management and verified from the books of account, the company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained in pursuance of Section 189 of the Companies Act, 2013, as such there are no comments on sub clauses a) and b).

(iv) The company has adequate internal control system in commensuration with its size and nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. We did not observe any weakness in the internal control system.

(v) The Company has not accepted any deposits from the public and as such the clause is not applicable.

vi) As per information and explanation given to us, the Central Government has not specified the maintenance of cost records under clause 148(1) of the Companies Act, 2013, for the services of the Company.

(vii) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance fund, income-tax, wealth-tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues applicable to it.

According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees' state insurance fund, income-tax, wealth-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues were outstanding at the period end, for a period of more than six months from the date they became payable.

(b) According to information and explanations given to us, there are no dues of income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax and cess which have not been deposited with the appropriate authorities on account of any dispute.

(c) Details of dues of Sales Tax, Income Tax, Custom Duty, Excise Duty which have not been deposited as on 31st March, 2015 on account of disputes are attached as Annexure A.

(d) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

(viii) The net worth of the company (paid-up capital free reserve), which is Rs.16.90 Crores, has been completely eroded as the accumulated losses are Rs. 20.12 Crores as on 31st March 2015. The company has suffered a cash loss of Rs. 52.06 Lacs in the financial year ended on 31.03.2014 as against cash loss of Rs. 52.54 lacs in the immediate preceding year.

ix) The company has not defaulted in repayment of dues to any financial institution, Bank or debenture-holder.

(x) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions, and as such clause is not applicable.

(xi) The Company does not have any term loans outstanding during the period, and as such clause is not applicable .

(xii) 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 audit.

List of disputed cases of Sales Tax/Income Tax/ Custom Duty/Excise Duty, authority with whom pending and the amount involved is detailed as under:-

S. No. Name of Statute Assessment Nature of Dues Amount Year

1 U.P. Sales Tax 1997-98 Sales Tax 116,536

2 U.P.(Central/ 1998-99 Sales Tax 45,254 Local)

3 Delhi Sales Tax 2000-01 Sales Tax 71,789

4 Delhi Sales Tax 2001-02 Sales Tax 2,572,528

5 Delhi Sales Tax 2003-04 Sales Tax 1,865,674

6 Delhi Sales Tax 2004-05 Sales Tax 230,073

7 T.N. Sales Tax 2000-01 Sales Tax 184,849

8 T.N. Sales Tax 2002-03 Sales Tax 140,111

9 West Bengal 1999-2000 Sales Tax 288,098 Sales Tax

10 West Bengal 2000-01 Sales Tax 90,650 Sales Tax

11 West Bengal 2002-03 Sales Tax 1,011,106 Sales Tax

12 Central Excise Act 1992-00 Penalty and 2,387,500 demand

13 Central Excise Act 1999-01 Interest and 69,969 penalty

14 Central Excise Act 2002-03 Interest and 19,427 penalty

15 Central Excise Act valuation case Excise Duty 1,509,876

16 Income Tax Act 2002-03 Penalty 1,700,000 1961

17 Income Tax Act 1996-97 Addition on 45,61,777 1961 Account of Sale cum Lease back transaction.

Name of statue Forum Where dispute is pending

U.P. Sales Tax JT commissioner of Trade Tax Nodia

U.P.(Central/Local) JT Commissioner of Trade Tax Nodia

Delhi Sales Tax Asst. Comm.ix, Delhi Sales Tax

Delhi Sales Tax Addii. Comm. ii, Delhi Sales Tax Delhi Sales Tax Addii. Comm. ii, Delhi Sales Tax

Delhi Sales Tax STO Delhi Sales Tax

T.N. Sales Tax CT iii, T.N.S. Tax Appeal Asstt. Comm

T.N. Sales Tax CTii, T.N.S. Tax Appeal Astt. Comm.

West Bengal Sales Tax Astt. Comm.Soth circle Directorate of commercial West bengal

West Bengal Sales Tax Asst. Comm. South circle, Directorate of commercial West Bengal

West Bengal Salax Asst.Comm. South Circle, Directorate Commercial West Bengal

Central Excis Act demand CEGAT New Delhi

Central Excise Act CEGAT New Delhi penalty

Central Excise Act penalty CEGAT New Delhi

Central Excise Act CEGAT New Delhi

Income Tax Act 1961 High court Allahabad

Income Tax Act1961 High court Allahabad It is hereby certified that there are no cases other than the above in which company is continently Habile



For GUPTA GARG & AGRAWAL

CHARTERED ACCOUNTANTS

FRN 505762C

(B.B.GUPTA)

Place : Noida PARTNER

Date : 30.5.2015 M. No. 012399


Mar 31, 2014

We have audited the accompanying financial statements of IO System Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13.09.2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act 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 the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date.

c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

As required by the Companies (Auditor''s report) Order, 2003 (as amended) issued by the Central Govt. of India in terms of section 227 (4A) of the Companies Act 1956, We enclose in the annexure a statement on the matters specified in the paragraph 4 & 5 of the said order.

As required by section 227(3) of the Act, we report that

a) 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;

b) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13.09.2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

e) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE REFERRED TO IN PARAGRAPH OF OUR REPORT OF EVEN DATE

The comments are in seriatim of the order

(i) (a) We have been informed that the company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) The management has carried out physical verification of assets at the end of the year. No major discrepancy noticed on such verification and reported to us.

(c) During the year under report, the company has not disposed of any of its fixed assets.

(ii) (a) The company is carrying non moving inventories valuing Rs. 2.25 lacs which have been physically verified at the year-end by the management. A provision of Rs. 2.00 lacs had already been made for diminution in value/ obsolesce.

(b) The procedures followed by the management were reasonable.

(c) The company is maintaining proper records of inventory. No discrepancy noticed on verification.

(iii) (a) As Informed, the company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, there are no comments on sub-clauses (b) (c) (d) of clause (iii) of the Order.

(e) The company has taken unsecured loan of Rs. 270.50 lacs (Rs. 44.00 lacs in the current year and Rs. 226.50 lacs up to 31.03.2013) from its holding company covered in the register maintained u/s 301 of the Companies Act, 1956. The no. of parties involved is one and total amount involved in the transactions is Rs. 270.50 lacs.

(f) The rate of interest and other terms and conditions of the unsecured loan taken by the company are prima-facie not prejudicial to the interest of the company.

(g) The company has been regular in payment of interest. The loan is repayable on demand which has not been made by the lender company during the year under report.

(iv) The company has adequate internal control procedures in commensuration with its size and nature of business in regard to purchase of inventory and fixed assets and for sale of goods.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered in the register maintained under section 301, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the company has not entered into any transaction for sale purchase of goods and services covered under section 301 of Act.

(vi) The clause is not applicable, as the company has not accepted any deposits from the public.

(vii) The Internal Audit was once carried by a firm of Chartered Accountants, which in our opinion commensurate with the size and the nature of business of the company.

(viii) The Central Govt has not prescribed the maintenance of the cost records.

(ix) (a) The company has generally been regular except minor delays in one or two cases in depositing undisputed statutory dues including PF, ESI, Income Tax, Sales Tax, Service tax, Excise, Education cess and Investor Education Fund etc with the appropriate authorities.

(b) A list of disputed cases of Sales tax/ Income tax/Custom duty/Excise duty, authority with whom pending and the amount involved is as per Annexure ''A''.

(x) The net worth of the company (paid-up capital free reserve), which is Rs.16.90 Crores, has been completely eroded as the accumulated losses are Rs. 19.60 Crores as on 31st March 2014. The company has suffered a cash loss of Rs. 52.54 Lacs in the financial year ended on 31.03.2014 as against cash loss of Rs. 41.96 lacs in the immediate preceding year.

(xi) The company has not defaulted in repayment of dues to any financial institution, Bank or debenture-holder

(xii) The company has not granted any loans or advances against security by way of pledge of shares, debentures or other securities.

(xiii) The clause is not applicable, as the company is not a nidhi/ mutual benefit fund/ society.

(xiv) The clause is not applicable, as the company is not trading in shares.

(xv) The company has not given any guarantees on behalf of others for raising loans from Banks/Financial Institutions.

(xvi) During the year under report, the company has not obtained any term loan.

(xvii) During the year under report, the company has neither raised nor utilized any Long-term loan.

(xviii) During the year under report, the company has not made any preferential allotment of its shares.

(xix) During the year under report, the company has not issued any debentures.

(xx) During the year under report, the company has not raised any money by way of public issue.

(xxi) 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 audit.

For GUPTA GARG & AGRAWAL Chartered Accountants FRN 505762C (B.B.GUPTA) Place : Noida PARTNER Date : 30th May, 2014 M. No. 012399


Mar 31, 2013

We have audited the accompanying financial statements of IO System Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control 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.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act 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 the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

b) in the case of the Profit and Loss Account, of the loss for the year ended on that date.

c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

As required by the Companies (Auditor''s report) Order, 2003 (as amended) issued by the Central Govt, of India in terms of section 227 (4A) of the Companies Act 1956, We enclose in the annexure a statement on the matters specified in the paragraph 4 & 5 of the said order.

As required by section 227(3) of the Act, we report that

a) 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;

b) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) On the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE REFERRED TO IN PARAGRAPH OF OUR REPORT OF EVEN DATE

(i) (a) We have been informed that the company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. ( b) The management has carried out physical verification of assets at the end of the year. No major discrepancy noticed on such verification and reported to us.

(c) During the year under report, the company has not disposed of any of its fixed assets.

(ii) (a) The company is carrying non moving inventories valuing Rs. 2.25 lacs which has been physically verified at the year-end by the management. A provision of Rs. 2.00 lacs has been made for diminution in value/ obsolescence.

(b) The procedures followed by the management were reasonable.

(c) The company is maintaining proper records of inventory. No discrepancy noticed on verification.

(iii) (a) As Informed, the company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, there are no comments on sub-clauses (b) (c) (d) of clause (iii) of the Order.

(b) The company has taken unsecured loan of Rs. 226.50 lacs (Rs. 44.00 lacs in the current year and Rs. 182.50 lacs up to 31.03.2012) from its holding company covered In the register maintained u/s 301 of the Companies Act, 1956. The no. of parties involved is one and total amount involved in the transactions is Rs. 226.50 lacs.

(c) The rate of interest and other terms and conditions of the unsecured loan taken by the company are prima-facie not prejudicial to the interest of the company.

(d) The company has been regular in payment of interest. The loan is repayable on demand which has not been made by the lender company during the year under report.

(iv) The company has adequate internal control procedures in commensuration with its size and nature of business in regard to purchase of inventory and fixed assets and for sale of goods.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered in the register maintained under section 301, have been so entered.

(b) in our opinion and according to the information and explanations given to us, the company has not entered into any transaction for sale purchase of goods & services covered under section 301 of the Act.

(vi) The clause is not applicable, as the company has not accepted any deposits from the public.

(vii) The Internal Audit was once carried by a firm of Chartered Accountant, which in our opinion commensurate with the size and the nature of business of the company.

(viii) The Central Govt, has not prescribed the maintenance of the cost records.

(ix) (a) The company has generally been regular except minor delays in one or two cases in depositing undisputed statutory dues including PF, ESI, Income Tax, Sales Tax, Service tax, Excise, Education cess and Investor Education Fund etc. with the appropriate authorities.

(b) A list of disputed cases of Sales tax/ Income tax/Custom duty/Excise duty, authority with whom pending and the amount involved is as per Annexure ''A''.

(x) The net worth of the company (paid-up capital free reserve), which is Rs.16.90 Crores, has been completely eroded as the accumulated losses are Rs. 19.07 Crores as on 31st March 2013. The company has suffered a cash loss of Rs. 41.96 Lacs in the financial year ended on 31.03.2013 as against cash loss of Rs. 35.26 lacs in the immediate preceding year.

(xi) The company has not defaulted in repayment of dues to any financial institution, Bank or debenture-holder.

(xii) The company has not granted any loans or advances against security by way of pledge of shares, debentures or other securities.

(xiii) The clause is not applicable, as the company is not a nidhi/ mutual benefit fund/ society.

(xiv) The clause is not applicable, as the company is not trading in shares.

(xv) The company has not given any guarantees on behalf of others for raising loans from Banks/Financial Institutions.

(xvi) During the year under report, the company has not obtained any term loan.

(xvii) During the year under report, the company has neither raised nor utilized any Long-term loan.

(xviii) During the year under report, the company has not made any preferential allotment of its shares.

(xix) During the year under report, the company has not issued any debentures.

(xx) During the year under report, the company has not raised any money by way of public issue.

(xxi) 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 audit.

List of disputed cases of Sales Tax/Income Tax/ Custom Duty/Excise Duty, authority with whom pending and the amount involved is detailed as under:-

S. No. Name of Statute Assessment Nature of Amount Year Dues

1 U.P.Sales Tax 1997-98 Sales Tax 116,536

2 U.P.(Central/ Local) 1998-99 Sales Tax 45,254

3 Delhi Sales Tax 2000-01 Sales Tax 71,789

4 Delhi Sales Tax 2001-02 Sales Tax 2,572,528

5 Delhi Sales Tax 2003-04 Sales Tax 1,865,674

6 Delhi Sales Tax 2004-05 Sales Tax 230,073

7 T.N. Sales Tax 2000-01 Sales Tax 184,849

8 T.N.Sales Tax 2002-03 Sales Tax 140,111

9 West Bengal Sales Tax 1999-2000 Sales Tax 288,098

10 West Bengal Sales Tax 2000-01 Sales Tax 90,650

11 West Bengal Sales Tax 2002-03 Sales Tax 1,011,106

TOTAL 6,616,668

12 Central Excise Act 1992-00 Penalty and 2,387,500

13 Central Excise Act 1999-01 Interest and 69,969

14 Central Excise Act 2002-03 Interest and 19,427

15 Central Excise Act valuation Excise Duty 1,509,876

TOTAL 3,986,772

16 Income Tax Act 1961 2002-03 Penalty 1,700,000

17 Income Tax Act 1961 2003-04 Addition in 15,721,000

18 Income Tax Act 1961 2003-04 Penalty 400,000

19 Income Tax Act 1961 2005-06 Addition in 1,785,000

20 Income Tax Act 1961 2005-06 Penalty 150,000

TOTAL 19,756,000



S. No. Name of Statute Forum Where dispue is pending

1 U.P.Sales Tax JT Commissioner of Trade Tax Noida

2 U.P.(Central/Local) JT Commissioner of Trade Tax Noida

3 Delhi Sales Tax Asstt. Comm. IX, Delhi Sales Tax

4 Delhi Sales Tax Addll. Comm. II, Delhi Sales Tax

5 Delhi Sales Tax Addll. Comm. II, Delhi Sales Tax

6 Delhi Sales Tax STO Delhi sales Tax

7 T.N. Sales Tax CT III, T. N.S.Tax Appeal Asstt. Comm.

8 T.N.SalesTax CT III, T. N.S.Tax Appeal Asstt. Comm.

9 West Bengal Sales Tax Asstt. Comm. South circle, Directorate of Commercial, West Bengal

10 West Bengal Sales Tax Asstt. Comm. South circle, Directorate of Commercial, West Bengal

11 West Bengal Sales Tax Asstt. Comm. South circle, Directorate of Commercial, West Bengal

12 Central Excise Act CEGAT New Delhi

13 Central Excise Act CEGAT New Delhi

14 Central Excise Act CEGAT New Delhi

15 Central Excise Act CEGAT New Delhi

16 Income Tax Act 1961 High Court Allahabad

17 Income Tax Act 1961 ITAT

18 Income Tax Act 1961 Commissioner of Income Tax, Appeal

19 Income Tax Act 1961 ITAT

20 Income Tax Act 1961 Commissioner of Income xTax , Appeal

It is hereby certified that there are no cases other than the above in which company is contingently Habile

For GUPTA GARG & AGRAWAL

Chartered Accountants

FRN : 505762C

(B.B GUPTA)

Place : Noida Partner

Date : 30th May, 2013 M.No. 012399


Mar 31, 2010

1. We have audited the attached Balance Sheet of IO SYSTEM LIMITED (formerly known as Spice Systems Limited), as at 31st March 2010, the Profit and Loss Account of the Company and Cash Flow Statement, both 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.

2. We conducted our audit in accordance with 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 includes 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. In accordance with the provisions of Section 227 of the Companies Act, 1956, we report as under:

(a) 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;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the books;

(c) The Balance Sheet, the Profit & Loss Account and the Cash Flow Statement dealt with by the report are in agreement with the books of account;

(d) In our opinion, the Profit & Loss Account, the Cash Flow Statement and the Balance Sheet comply with the Accounting Standards referred to in Sub-Section 3C of Section 211 of the Companies Act, 1956;

(e) On the basis of written representations received from the directors of the Company as at March 31, 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 director of the Company under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Notes to the Accounts in Schedule-17, 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:

i) In the case of the Balance Sheet, of the state of the affairs of the Company as at 31st March 2010;

ii) In the case of the Profit and Loss Account, of the profit for the year ended on that date; and

iii) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

4. As required by the Companies (Auditors Report) Order 2003, (as amended) issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate, we give below our comments in seriatim on the matters specified in paragraphs 4 & 5 of the said order:

(i) (a) We have been informed that the company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) There is one computer in the company which has been physically verified by the management.

(c) During the year under report, the company has disposed off all its fixed assets except one computer. (ii) (a) The physical verification of inventory was carried out at the year-end by the management.

(b) The procedures followed by the management were reasonable.

(c) The company is maintaining proper records of inventory. Discrepancies noticed on valuation of old and damaged stocks significant in nature, have been properly dealt with in the books of account.

(iii) (a) As Informed, the company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause (iii) (b) (c) and (d) of the Companies (Auditors report) order 2003 (as amended) are not applicable.

(b) The company had not taken any loan or unsecured loan from a company/firm or any other concern covered in the register maintained under section 301 of the Companies Act, 1956 as such the sub clause (f) & (g) of Companies (Auditors Report) Order 2003 ( as amended) are not applicable.

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

(d) As per the terms of the agreement, the company has been regular in payment of principal and interest.

(iv) The company has adequate internal control procedures in commensuration with its size and nature of business in regard to purchase of inventory and fixed assets and for sale of goods.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered in the register maintained under section 301, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the company has not entered into transactions for a value exceeding Rs. 5 lacs and as such the clause is not applicable.

(vi) The clause is not applicable, as the company has not accepted any deposits from the public.

(vii) The Internal Audit was once carried out at the end of the financial year, which commensurate with the size and the nature of business of the company.

(viii) The Central Govt has not prescribed the maintenance of the cost records.

(ix) (a) The company has generally been regular in depositing undisputed statutory dues including PF, ESI, Income Tax, Sales Tax, Service tax, Excise, Education cess and Investor Education Fund etc with the appropriate authorities.

(b) A list of disputed cases of Sales tax/ Income tax/Custom duty/Excise duty, authority with whom pending and the amount involved is as per Annexure A.

To Income Tax Department for Rs. 47.45 lacs towards penalties imposed against which company is in appeal.

(x) The net worth of the company (paid-up capital + free reserve), which is Rs. 16.90 Crores, has been completely eroded as the accumulated losses are Rs. 17.40 Crores as on 31st March 2010. The company has earned a cash profit of Rs. 14.13 Lacs in the financial year ended on 31.03.2010 as against cash loss of Rs. 33.67 Lacs suffered in the immediate preceding year.

(xi) The company has not defaulted in repayment of dues to any financial institution, Bank or debenture-holder.

(xii) The company has not granted any loans or advances against security by way of pledge of shares, debentures or other securities.

(xiii) The clause is not applicable, as the company is not a nidhi/ mutual benefit fund/ society.

(xiv) The clause is not applicable, as the company is not trading in shares.

(xv) The company has not given any guarantees on behalf of others for raising loans from Banks/ Financial Institutions.

(xvi) During the year under report, the company has not obtained any term loan.

(xvii) During the year under report, the company has neither raised nor utilized any Long-term loan.

(xviii) During the year under report, the company has not made any preferential allotment of its shares.

(xix) During the year under report, the company has not issued any debentures.

(xx) During the year under report, the company has not raised any money by way of public issue.

(xxi) 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 audit.

For Gupta Garg & Agrawal

Chartered Accountants

Sd/- Place : New Delhi (B. B. Gupta)

Date : 12th August, 2010 Partner

 
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