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Auditor Report of IZMO Ltd.

Mar 31, 2015

I have audited the accompanying standalone financial statements of Izmo Limited (formerly Logix Microsystems 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 then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone 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 standalone 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 oftheAct, 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.

Auditors' Responsibility

My responsibility is to express an opinion on these standalone financial statements based on my audit. I 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 thereunder.

I conducted my audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that I 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.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion on the standalone financial statements.

Opinion

In my opinion and to the best of my information and according to the explanations given to me, the aforesaid standalone 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 profit and its cash flows for the year ended on that date.

Other Matter

a) The Consolidation of Financial Statements and Consolidation of Cash Flow Statements of his subsidiaries has not been complied as per Companies Act 2013.1 am therefore unable to comment on the impact, if any, on the Profit & Loss account as at the Balance Sheet date. my 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, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, I 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) ofthe Act, I report that:

a) I have sought and obtained all the information and explanations which to the best of my knowledge and belief were necessary for the purposes of my audit.

b) in my opinion proper books of account as required by law have been kept by the Company so far as it appears from my 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 my opinion, the aforesaid standalone 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) ofthe 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 my opinion and to the best of my information and according to the explanations given to me.

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 24.24 to the financial statements;

ii. 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 24.25 to the financial statements;

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

Annexure to the Independent Auditors' Report

The Annexure referred to in my Independent Auditors' Report to the members of the Company on the standalone financial statements for the year ended 31 March 2015,1 report that:

i) a)The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b)The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In my opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

ii) The Company is a service company, primarily rendering software services. Accordingly, it does not hold any physical inventories.Thus, paragraph 3(ii) ofthe Order is not applicable.

iii) a)The Company has granted loans to one bodies corporate covered in the register maintained under section 189 of the Companies Act, 2013 ('the Act').

b) In the case of the loans granted to the bodies corporate listed in the register maintained under section 189 of the Act, the terms of arrangements do not stipulate any repayment schedule and the loans are repayable on demand. Accordingly, paragraph 3(iii)(b) of the Order is not applicable to the Company in respect of repayment of the principal amount.

c) In respect of loans granted, the terms of repayment of the principal amount and the payment of the interest have not been stipulated and hence I am unable to comment as to whether receipt of the principal amount and the interest is regular.

d) Where overdue amount in respect of a loan granted is more than rupees one lakh, reasonable steps have not been taken by the Company for recovery of the principal amount.

iv) In my opinion and according to the information and explanations given to me, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and sale of services. The activities of the Company do not involve purchase of inventory and the sale of goods. I have not observed any major weakness in the internal control system during the course of the audit.

Annexure to the Independent Auditors' Report

v) The Company has not accepted any deposits from the public.

vi) The Central Government has not prescribed the maintenance of cost records under section 148(1) of the Act, for any of the services rendered by the Company.

vii) a) According to the information and explanations given to me and on the basis of my examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, income tax, sales tax, wealth tax, service tax, duty of customs, value added tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. As explained to me, the Company did not have any dues on account of employees' state insurance and duty of excise.

According to the information and explanations given to me, undisputed amounts payable in respect of provident fund, income tax, sales tax, wealth tax, service tax, duty of customs, value added tax, cess and other material statutory dues were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable.

Name of the Nature of Amount Period to Date of statute the dues (Rs) which the Payment amount relates

Income Tax TDSon 11,30,408 March Amount not Act,1961 foreign 2015 paid till date Payments

b) According to the information and explanations given to me, there are no material dues of wealth tax, duty of customs and cess which have not been deposited with the appropriate authorities on account of any dispute. However, according to information and explanations given to me, the following dues of income tax have not been deposited by the Company on account of disputes:

Name of the Nature of Amount Amount Paid statute the dues (Rs) Under Protest (Rs)

IncomeTax Transfer 5,51,67,570 NIL Act, 1961 Pricing 2008-09

IncomeTax Transfer 3,90,81,185 NIL Act, 1961 Pricing 2009-10



Name of the Period to Forum where dispute statute which the is pending amount relates

IncomeTax F.Y Appellate Act, 1961 Tribunal

IncomeTax F.Y Appellate Act, 1961 Tribunal

c) As regards provision for current year taxation the company is in the process of making payment towards TDS on NonResident dues of Rs. 11,30,408/- under the provisions of IncomeTax Act,1961. Management is of the opinion that Dues with respect to withholding taxes shall be paid in full before the due date of filing of Income tax returns and accordingly no disallowance under the provisions oflncome Tax Act,1961 shall be attracted in respect of the same.

viii) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

ix) According to the information and explanations given to me and on the basis of examination of books of accounts, I observe that the Company has defaulted in repayment of term loans installments amounting to Rs.260.02 Lakh (Principal amount of Rs.194.62 Lakh and Interest ofRs.65.40 Lakh) payable from September 2012 to March 2015 and Rs. 11.19 Crore towards other credit facilities payable from September 2011.

x) In my opinion and according to the information and the explanations given to me, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xi) The Company did not have any term loans outstanding during the year.

xii) According to the information and explanations given to me, no material fraud on or by the Company has been noticed or reported during the course of my audit.

R. Vijayanand Chartered Accountant M. No: 202118

Place: New York,U.S.A Date : 30th May, 2015






Mar 31, 2014

1. I have audited the attached Balance Sheet of M/s Logix Microsystems Limited, Bangalore (''the Company'') as at March 31, 2014 and also the Statement of profit and loss and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company''s management. My responsibility is to express an opinion on these financial statements based on my audit.

Management''s Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements, that give a true and fair view of the financial position, financial performance of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 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.

Auditors'' Responsibility

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

4. An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors'' 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.

5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

6. I, further report that:

( i) Attention is drawn to Note No 23.13(b) as regards remuneration paid to the managing director is in excess of limits prescribed under the Companies Act,1956. The Company had applied for the requisite approval from the Central Government which had not been granted.

(ii) Short Term Loans and advances as at 31st March 2014 includes a sum of Rs. 51.42 lacs of accrued interest on Inter-Corporate Deposits (ICD), which is long overdue and pending confirmation. Management is of the opinion that the same would be recovered in full and accordingly no provision towards possible non-recovery has been made in respect of the same. In the absence of confirmation for the same, I am unable to comment on the recoverability of the aforesaid amounts.

(iii) Attention is drawn to Note No 23.18 as regards Investment in Subsidiaries including Share Application Money pending allotment, Long term investments as at the Balance Sheet date include Rs.160.30 crores in wholly owned subsidiaries, including share application pending allotment from Izmo Europe BVBA, Rs.8.89 Crores , which are carried at cost. In the absence of independently reviewed / audited financial statements in respect of these subsidiaries (including their step down subsidiaries), I am unable to carry out necessary procedures to reliably examine if there has been any decline in the carrying value of the stated investments. I am therefore unable to comment on the impact, if any, on the Profit & Loss account as at the Balance Sheet date.

Further to my comments in annexure referred to above, I report that:

7. In my opinion and to the best of my information and according to the explanations given to me and subject to cumulative consequential effect of the matter(s) described in paragraph 6 above on the profits , assets and liabilities of the company which are not determinable , 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 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 Profit for the year ended on that date; and

c) in the case of cash flow statement, of the cash flows for the year ended on that date.

8. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, I give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

9. As required by Section 227(3) of the Act, I report that:

i. I have obtained all the information and explanations, which to the best of my knowledge and belief were necessary for the purposes of my audit;

ii. In my opinion, proper books of account as required by law have been kept by the Company so far as appears from my examination of those books;

iii. The financial statements dealt with by this report are in agreement with the books of account

iv. Except for the effects of the matter(s) described in paragraph 6 above, In my opinion, the Balance Sheet and Statement of Profit & Loss comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and

v. On the basis of the written representations received from the directors, as on March 31, 2014, and taken on record by the Board of Directors, I report that 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.

Annexure To the Auditor''s Report ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT OF EVEN DATE TO THE MEMBERS OF LOGIX MICROSYSTEMS LIMITED, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2014.

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to me and the books of account and other records examined by me in the normal course of audit, I report that:

i) Fixed Assets:

a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) The fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In my opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

c) In my opinion, a substantial part of fixed assets has not been disposed off during the year.

ii) Inventory :

a) The management has conducted physical verification of inventory at reasonable intervals during the year.

b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventory and no material discrepancies between physical inventory and book records were noticed on physical verification.''

iii) Loans Granted:

a) The Company has granted secured/unsecured loans to Carazoo Online Solutions Private Limited of Rs. 43,56,233/- (Rupees Forty Three Lakh Fifty Six Thousand Two Hundred Thirty Three Only) parties covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year is Rs. 43,56,233/- and the year-end balance is Rs. 43,56,233/-.

b) The Company has granted loans to a party covered under Section 301 of the Act and since the terms and conditions of such a loan are not stipulated, I am unable to comment as to whether the rate of interest or other terms and conditions are prejudicial to the interest of the Company.

c) In respect of loans granted, the terms of repayment of the principal amount and the payment of the interest have not been stipulated and hence I am unable to comment as to whether receipt of the principal amount and the interest is regular.

d) Where overdue amount in respect of a loan granted is more than one lakh, reasonable steps have not been taken by the Company for recovery of the principal amount and interest.

e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(f) and 4(iii)(g) of the Order are not applicable.

iv) In my opinion and according to information and explanations given to me, having regard to the explanations that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of material and fixed assets and for the sale of goods. Further, on the basis of my examination of the books and records of the company carried out in accordance with the auditing standards generally accepted in India and according to the information and explanations given to me, I have not observed nor have been informed of any continuing failure to correct major weaknesses in internal controls in these areas.

v) a)In the absence of updated registers being made available

for my verification during the course of audit I am unable to comment as to whether, the particulars of all contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

b) Further to my comment in (a) above, I am unable to comment about transactions made in pursuance of such contracts or arrangements and exceeding Rs. 5 Lakh in respect of any party during the year, and the prices having regard to the prevailing market prices at the relevant time.

vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

vii) In my opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

viii) To the best of my knowledge and belief, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act, in respect of Company''s products and services. Accordingly, the provisions of clause 4(viii) of the Order are not applicable.

ix) a) Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have not been regularly deposited with the appropriate authorities and there have been significant delays in a large number of cases. Undisputed amounts payable in respect thereof, which were outstanding at the year-end for a period of more than six months from the date they became payable are as follows.



Name of the Nature of Amount Period to which the statute the dues (Rs) amount relates Income Tax TDS on April 2013 to Act, 1961 foreign Payments 16,05,745 September 2013 The Employee Employeer and 3,93,285 March 2012 Provident Funds Employee Miscellaneous Contribution Provisions Act,1952

The Employee Employeer 38,58,288 April 2012 to Provident Funds and March 2013 Miscellaneous Employee Provisions Contribution Act,1952

The Employee Employer April 2013 to Provident Funds and 16,09,177 September 2013 Miscellaneous Employee Provisions Contribution Act,1952

Name of the statute Date of Payment

Income Tax Act, 1961 Amount not paid till date

The Employee Provident Funds and Amount not paid till date Miscellaneous Provisions Act,1952

The Employee Provident Funds and Amount not paid till date Miscellaneous Provisions Act,1952

The Employee Provident Funds and Amount not paid till date Miscellaneous Provisions Act,1952

b) The dues outstanding in respect of sales-tax, income-tax, custom duty, wealth-tax, excise duty, cess on account of any dispute, are as follows:

Name of the Statute Nature of Dues Amount Rs Amount Paid Under Procest Rs Income Tax Act, 1961 Transfer Pricing 5,51,67,570 Nil

Income Tax Act, 1961 Transfer Pricing 3,90,81,185 Nil



Nameof The Statute Period to which the Forum where dispute amount relates is pending

Income Tax Act, 1961 F.Y 2008.09 Appellate Tribunal

Income Tax Act, 1961 F.Y 2009.10 Appellate Tribunal

c) The Company during the year has not made remittance towards Withholding tax dues with respect to Non residents under the provisions of Income tax Act,1961. Further provisions for interest on account of the above dues have not been provided for in the books of account.

d) As regards provision for current year taxation the company is in the process of making payment towards TDS on Non-Resident dues of Rs. 16,05,745/- under the provisions of Income Tax Act,1961 and provident fund dues of Rs. 58,60,750/- under the provisions of Provident Fund Act,1952. Management is of the opinion that Dues with respect to withholding taxes and Provident fund dues shall be paid in full before the due date of filing of Income tax returns and accordingly no disallowance under the provisions of Income Tax Act,1961 shall be attracted in respect of the same.

x) In my opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

xi) According to the information and explanations given to

me and on the basis of examination of books of accounts, I observe that the Company has defaulted in repayment ofterm loans installments amounting to Rs.154.59 Lakh (Principal amount of Rs.105.91 Lakh and Interest of Rs.48.68 Lakh) payable from September 2012 to March 2014 and Rs. 11.39 Crore towards other credit facilities payable from September 2011.

xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

xiii) In my opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, provisions of clause 4(xiii) of the Order are not applicable.

xiv) The Company makes investments in Shares and other Investments for which proper records have been maintained for the transactions and contracts; and timely entries have been made for the same. These investments have been held by the company in its own name. The investment register required to be maintained under Section 372A (5)(a) of the Companies Act is in the process of being updated.

xv) The Company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 4(xv) of the Order are not applicable.

xvi) The Company did not have any term loans outstanding during the year. Accordingly, the provisions of clause 4(xvi) of the Order are not applicable.

xvii) In my opinion, no funds raised on short-term basis have been used for long-term investment by the Company.

xviii) During the year, the Company has not made any preferential allotment of shares to (parties /and companies) covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

xix) The Company has neither issued nor had any

outstanding debentures during the year. The Company has not issued unsecured, convertible debentures to its holding Company. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

xxi) No fraud on or by the Company has been noticed or reported during the period covered by my audit.



R. Vijayanand Chartered Accountant M. No: 202118

Place: Bangalore Date : 30th May, 2014


Mar 31, 2013

Report on the Financial Statements

1. I have audited the attached Balance Sheet of M/s LOGIX MICROSYSTEMS LIMITED, BANGALORE Limited (''the Company'') as at March 31, 2013 and also the Statement of profit and loss and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company''s management. My responsibility is to express an opinion on these financial statements based on my audit

Management''s Responsibility for the Financial Statements

2. Management is responsible for the preparation 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 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.

Auditors'' Responsibility

3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my 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.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors'' 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 appropriate-

* artiness 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.

5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

6. I further report that:

(i) Attention is drawn to Note No 24.14(b) as regards remuneration paid to the managing director is in excess of limits prescribed under the Companies Act,1956.

(ii) Short Term Loans and advances as at 31st March 2013 includes a sum of Rs. 51.42 lacs of accrued interest on Interoperate Deposits (ICD), which is long overdue and pending confirmation. Management is of the opinion that the same would be recovered in full and accordingly no provision

(iii) Attention is drawn to Note No 24.30 as regards to reversal of interest receivable as doubtful. This includes ICD related receivable of Rs.230.04 lacs which is secured against pledge of shares, which as at the Balance Sheet date had a market value of Rs. 29.94 lacs which was lower than the outstanding balance. The management is of the view that interest is no longer receivable accordingly provision towards possible non-recovery has been made in respect of the same.

(iv) Attention is drawn to Note No 24.19 as regards Investment in Subsidiaries including Share Application Money pending allotment, Long term investments as at the Balance Sheet date include Rs. 160.40 crores in wholly owned subsidiaries, including share application pending allotment, which are carried at cost. In the absence of independently reviewed / audited financial statements in respect of these subsidiaries (including their step down subsidiaries), we are unable to carry out necessary procedures to reliably examine if there has been a permanent decline in the carrying value of the stated investments. We are therefore unable to comment on the impact, if any, on the Profit 8c Loss account and the adequacy of Reserve for Diminution in value of long term Investments as at the Balance Sheet date.

(v) Attention is drawn to Note No.24.23 as regards Exceptional expense recognized during the year. During the current financial year the company consequent to the commercial negotiations with its subsidiary Homestar Inc has accepted mutually to offer a rebate on exports of Rs. 389.96 lacs.

(vi) Attention is drawn to Note No.24.29 as regards balances of Sundry Debtors, Loans and Advances are subject to reconciliation and confirmation.

Further to my comments in annexure referred to above, I report that:

7. In my opinion and to the best of my information and according to the explanations given to me and subject to cumulative consequential effect of the matter(s) described in paragraph 6 above on the profits , assets and liabilities of the company which are not determinable , 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 the balance sheet, of the state of affairs of the Company as at March 31,2013;

(b) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

(c) in the case of cash flow statement, of the cash flows for the year ended on that date.

8. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

9. As required by Section 227(3) of the Act, I report that::

i. I have obtained all the information and explanations, which to the best of my knowledge and belief were necessary for the purposes of my audit;

ii. In my opinion, proper books of account as required by law have been kept by the Company so far as appears from my examination of those books;

iii. The financial statements dealt with by this report are in agreement with the books of account

iv. {Except for the effects of the matter(s) described in paragraph 6 above], in my opinion, the financial statements comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act; and

v. On the basis of the written representations received from the directors, as on March 31,2013, and taken on record by the Board of Directors, 1 report that 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.

R.Vijayanand Chartered Accountant Membership No: 202118 Bangalore Date : 2nd September, 2013

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to me and the books of account and other records examined by me in the normal course of audit, I report that:

I. Fixed Assets:

(a) I am given to understand that, the Company is in the process of updating its records showing full particulars including quantitative details and situation of its Fixed Assets.

(b) The Company management explained that it has a regular system of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of 3 years and that no material discrepancies were noticed on verification during the year. In the absence physical verification reports and reconciliations being furnished for my review, I am unable to comment on the adequacy of the physical verification having regard to the size of the Company and the nature of its assets.

(c) The fixed assets disposed off during the year, in my opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in my opinion, not affected the going concern status of the Company.

II. Inventory:

(a) According to information and explanations given to me, the management has conducted physical verification of inventory at reasonable intervals.

(b) In my opinion and according to the information and explanation given to me, the procedure being followed by the management with regard to physical verification of inventory is reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In my opinion and according to the information and explanations given to me, the company has maintained proper records of inventory. As explained to me, no material discrepancies were noted on physical verification.

III. Loans Granted:

(a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b) to 4(iii) (d) of the Order are not applicable

(b) In respect of the loans granted to the other company, no repayment schedule has been defined and no interest is charged on such loan, and in my opinion it is not prima facie prejudicial to the interest of the company. Consequently, clause iii(c) and iii(d) of the Order are not applicable.

(c) The Company has availed an interest free unsecured loan of Rs.23.26 lacs from director during the year.

(d) In respect of the loans taken from director, no re-payment schedule has been defined and no interest is paid on such

loan, and in my opinion is not prima prejudicial to the interest of the company.

(e) During the year, the company has availed an interest free unsecured loan of Rs.41.33 lacs from Carazoo Online Solutions Pvt Ltd., a subsidiary of the company

(f) In respect of the loans availed from other company, no repayment schedule has been defined and no interest is charged on such loan, and in my opinion it is not prima facie prejudicial to the interest of the company. Consequently, clause iii(c) and iii(d) of the Order are not applicable

IV. In my opinion and according to information and explanations

given to me, having regard to the explanations that certain items purchased are of special nature for which suitable alternative smy-ces do not exist for obtaining comparative quotations, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of material and fixed assets and for the sale of goods. Further, on the basis of my examination of the books and records of the company carried out in accordance with the auditing standards generally accepted in India and according to the information and explanations given to me, I have not observed nor have been informed of any continuing failure to correct major weaknesses in internal controls in these areas.

V. (a)In the absence of updated registers being made available for my verification during the course of audit I are unable to comment as to whether, the particulars of all contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) Further to my comment in (a) above, I am unable to comment about transactions made in pursuance of such contracts or arrangements and exceeding Rs. 5 lacs in respect of any party during the year, and the prices having regard to the prevailing market prices at the relevant time.

VI. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

VII. The Company has an internal audit system, the scope and coverage of which, in my opinion, requires to be further enhanced to be commensurate with its size and the nature of its business.

* VIII. To the best of my knowledge and belief, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act, in respect of Company''s products and services. Accordingly, the provisions of clause 4(viii) of the Order are not applicable.

IX. (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, service tax, custom duty and other material statutory dues, as applicable, have not been regularly deposited with the appropriate authorities and there have '' » been significant delays in a large number of cases.

Further, Undisputed amounts payable in respect thereof, which were outstanding at the year-end for a period of more than six months from the date they became payable are as follows:

Name of the Nature of Amount Period to which Date of Payment statute the dues (Rs) the amount relates

Service Tax Output 40,09,140 April 2011 to Amount not paid Service tax March 2012 till date 12.36%

Service Tax Output 8,56,241 April 2012 to Sep- Amount of Service tax tember 2012 3,95,298 has been 12.36% paid till date

Income Tax TDS on 14,40,111 April 2012 to An amount of Act, 1961 foreign Pay- March 2013 3,95,298 has been ments paid on various dates

Income Tax TDS on 12,63,658 April 2011 to Amount not paid Act, 1961 Salaries and March 2012 till date Director Remune ration

Income Tax TDS on 19,65,924 April 2012 to Sep- Amount not paid Act,1961 Salaries and tember 2012 till date Director Remune ration

The Em- Employer 3,68,021 April 2011 to Amount not paid ployee Provi- and Em- March 2012 till date dent Funds ployee Con- and Mis- tribution cellaneous Provisions Act,1952

The Em- Employer 20,50,740 April 2012 to Sep- Amount not paid ployee Provi- and Em- tember 2012 till date dent Funds ployee Con- : and Mis- tribution cellaneous Provision s Act,1952

(b) The dues outstanding in respect of sales-tax, income-tax, custom duty, wealth-tax, excise duty, cess on account of any dispute, are as follows:

Name of Nature of Amount Amount Paid Period to Forum where the statute dues (Rs) Under Protest which the dispute is pending (Rs) amount relates

Karna taka Central 227.93 NIL F.Y Commissioner Value added Sales Tax lacs 2005-06 of Commercial Tax Act, Taxes-Karna- 2003 taka

Income Tax Transfer F.Y Dispute Resolu- Act, 1961 Pricing 2008-0 tion Panel

(c) The Company during the year has not made remittance towards Withholding tax dues with respect to Salaries and payments made to Non residents under the provisions of Income tax Act,1961 and has not made remittance towards service Tax dues under the Provisions of Finance Act 2005. Further provisions for interest on account of the above dues have not been provided for in the books of account.

(d) As regards provision for current year taxation the company is in the process of making payment towards withholding tax dues under the provisions of Income Tax Act, 1961 and provident fund dues under the provisions of Provident Fund

Act, 1952. Management is of the opinion that Dues with respect to withholding taxes and Provident fund dues shall be paid in full before the due date of filing of Income tax returns and accordingly no disallowance under the provisions of Income Tax Act,1961 shall be attracted in respect of the same.

X. In my opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

XI. According to the information and explanations given to me and on the basis of examination of books of accounts, I observe that the Company has defaulted in repayment of term loans installments amounting to Rs.53.76 lacs (Principal amount of Rs.33.75 lacs and Interest of Rs.20.00 lacs) payable from September to March 2013 and Rs. 68.65 lacs towards other credit facilities payable from September 2011

XII. The company has granted a loan (Inter Corporate Deposit) on the basis of security by wav of pledge of shares with an outstanding (including interest) of Rs. 218 lacs against which the market value of pledged security was only Rs. 29.94 lacs as at the year end, in respect of which adequate documents showing the pledge of assets in FMV Value of the company were unavailable. Further the Company has provided provision for the said amount in the books of account.

XIII. In my opinion, the Company is not a chit fond or a nidhi/ mutual benefit fond/ society. Accordingly, provisions of clause 4(xiii) of the Order are not applicable.

XIV. The Company makes investments in Shares and other Investments for which proper records have been maintained for the transactions and contracts; and timely entries have been made for the same. These investments have been held by the company in its own name. The investment register required to be maintained under Section 372A (5)(a) of the Companies Act is in the process of being updated.

XV. As explained to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

XVI. The company has obtained a corporate loan during the year for general corporate purposes, the terms of sanction for which does not specify stipulations regarding the purpose for which the same is to be applied.

XVII. On the basis of an overall examination of the balance sheet of the company, in my opinion and according to the explanations given to us, there are no funds raised on a short term basis which have been used for long term investments.

XVIII. During the year, the Company has not made any preferential allotment of shares to (parties /and companies) covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

XIX. The Company has neither issued nor had any outstanding debentures during the year. The Company has issued unsecured, convertible debentures to its holding Company . Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

XX. The clause as regards end-use of the funds raised by way of issue of equity shares is not applicable for the year.

XXI. As explained to me and based on my examination of the books and records of the company carried out in accordance with generally accepted auditing practices in India, no fraud on or by the Company has been noticed or reported during the cmyse of my audit.

R.Vijayanand

Chartered Accountant

Membership No.: 202118

Bangalore

Date: 2nd September, 2013


Mar 31, 2012

1. We have audited the attached balance sheet of M/s LOGIX MICROSYSTEMS LIMITED, BANGALORE ("the Company") as at March 31, 2012 and the profit & loss account and cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's 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 misstatements. 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 management, as well as evaluating the overall financial statements. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditor's Report) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we further enclose in the annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable to the Company.

4. We further report that:

(i) Attention is drawn to Note No 24.14(b) as regards remuneration paid to the managing director is in excess of limits prescribed under the Companies Act.

(ii) Short Term Loans and advances as at 31st March 2012 includes a sum of Rs. 269.81 lacs of accrued interest on Inter-Corporate Deposits (ICD), which is long overdue and pending confirmation. This includes ICD related receivable of Rs.218.38 lacs which is secured against pledge of shares, which as at the Balance Sheet date had a market value of Rs. 29.94 lacs which was lower than the outstanding balance. Management is of the opinion that the same would be recovered in full and accordingly no provision towards possible non-recovery has been made in respect of the same. In the absence of confirmation for the same, we are unable to comment on the recoverability of the aforesaid amounts.

(iii) Attention is drawn to Note No 24.19 as regards Investment in Subsidiaries including Share Application Money pending allotment, Long term investments as at the Balance Sheet date include Rs.160 crores in wholly owned subsidiaries, including share application pending allotment, which are carried at cost. In the absence of independently reviewed / audited financial statements in respect of these subsidiaries (including their step down subsidiaries), we are unable to carry out necessary procedures to reliably examine if there has been a permanent decline in the carrying value of the stated investments. We are therefore unable to comment on the impact, if any, on the Profit & Loss account and the adequacy of Reserve for Diminution in value of long term Investments as at the Balance Sheet date.

iv) Without qualifying our opinion, we draw attention to Note No 24.30 regarding purchase and sales from Private Limited

Companies covered under Section 297 of the Companies Act. In this regard the company is in the process of making an application for condo nation of delay and obtaining necessary government approval. The ultimate outcome of the company's application in this regard cannot be presently determined. Pending the final outcome, no adjustments have been made in this regard, in the financial statement.

(v) Attention is drawn to Note No.24.23 as regards Exceptional expense of Rs. 399.41 lacs recognized during the year.

5. Subject to the above and further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) we have obtained all the information (except that as reported in Para 4 above) 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 appears from our examination of those books;

(c) the Balance Sheet and the Profit and Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of account;

(d) in our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet, the Profit & Loss account and the 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 except as regards accounting for Super Annuation expenses on a cash basis as disclosed in Note No.24.1 (j)

6. Subject to above and further subject to the Notes on accounts in general as required, in our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and the Profit and Loss Account and Cash Flow Statement read together with the notes thereon 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 affairs of the Company as at 31st March, 2012;

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

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

7. On the basis of written representations received from the Directors, as at March 31, 2012 and taken on record by the Board of Directors, we report that none of the Directors are disqualified as at March 31, 2012, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

ANNEXURE TO THE

Auditors' Report

THE ANNEXURE REFERRED TO IN THE AUDITORS' REPORT TO THE MEMBERS OF LOGIX MICROSYSTEMS LIMITED ("THE COMPANY") FOR THE YEAR ENDED MARCH 31, 2012.

(Referred to in paragraph 3 thereof)

i. Fixed Assets:

a) We are given to understand that, the Company is in the process of updating its records showing full particulars including quantitative details and situation of its Fixed Assets.

b) The Company management explained that it has a regular system of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of 3 years and that no material discrepancies were noticed on verification during the year. In the absence physical verification reports and reconciliations being furnished for our review, we are unable to comment on the adequacy of the physical verification having regard to the size of the Company and the nature of its assets.

c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company

ii. Inventory:

a) According to information and explanations given to us, the management has conducted physical verification of inventory at reasonable intervals.

b) In our opinion and according to the information and explanation given to us, the procedure being followed by the management with regard to physical verification of inventory is reasonable and adequate in relation to the size of the company and the nature of its business.

c) In our opinion and according to the information and explanations given to us, the company has maintained proper records of inventory. As explained to us, no material discrepancies were noted on physical verification.

iii. Loans Granted:

a) During the year, the company has granted an interest free unsecured loan of Rs.3 lacs to Carazoo Online Solutions Pvt Ltd., a subsidiary of the company.

b) In respect of the loans granted to the other company, no re- payment schedule has been defined and no interest is charged on such loan, and in our opinion it is not prima facie prejudicial to the interest of the company. Consequently, clause iii(c) and iii(d) of the Order are not applicable.

c) The Company has availed an interest free unsecured loan of Rs.36.75 lacs from director during the year.

d) In respect of the loans taken from director, no re-payment schedule has been defined and no interest is paid on such loan, and in our opinion is not prima facie prejudicial to the interest of the company.

iv. In our opinion and according to information and explanations given to us, having regard to the explanations that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of material and fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the company carried out in accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have not observed nor have been informed of any continuing failure to correct major weaknesses in internal controls in these areas.

v. a) In the absence of updated registers being made available

for our verification during the course of audit we are unable to comment as to whether, the particulars of all contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

b) Further to our comment in (a) above, we are unable to comment about transactions made in pursuance of such contracts or arrangements and exceeding Rs. 5 lacs in respect of any party during the year, and the prices having regard to the prevailing market prices at the relevant time.

vi. The Company has not accepted deposits from the public during the year and thus the provisions of section 58A and 58AA is not applicable.

vii. Though the company has an internal audit process, the same is to be strengthened to make it commensurate with the size and nature of its business.

viii. The Central Government has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for any of the Services rendered by the Company.

ix. a) The Company is generally regular in depositing

undisputed applicable statutory dues including Wealth Tax, Custom Duty, Cess and other statutory dues with the appropriate authorities subject to certain delays in remittance of Provident Fund, Tax deducted at Source and Service Tax. Related amounts of Rs.22.13 lacs, Rs.29.42 lacs and Rs.75.91 lacs were outstanding for a period exceeding six months from the date they became payable as at the year-end, of which a sum of Rs. 51.56 lacs has been subsequently remitted.

b) In our opinion and according to information and

explanations given to us, there are no dues of Provident Fund, Wealth Tax, Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, Cess which have not been deposited on account of any dispute.

x. The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

xi. According to the information and explanations given to us and on the basis of examination of books of accounts, we observe that the Company has defaulted in repayment of term loans instalments amounting to Rs.13.17 lacs (Principal amount of Rs.9.66 lacs and Interest of Rs.3.51 lacs) payable for February and March 2012 and Rs. 1062.82 lacs towards other credit facilities payable from September 2011.

xii. The company has granted a loan (Inter Corporate Deposit) on the basis of security by way of pledge of shares with an outstanding (including interest) of Rs. 218 lacs against which the market value of pledged security was only Rs. 29.94 lacs as at the year end, in respect of which adequate documents showing the pledge of assets in favour of the company were unavailable.

xiii. In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/society.

xiv. The Company makes investments in Shares and other Investments for which proper records have been maintained for the transactions and contracts; and timely entries have been made for the same. These investments have been held by the company in its own name. The investment register required to be maintained under Section 372A (5)(a) of the Companies Act is in the process of being updated.

xv. As explained to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

xvi. The company has obtained a corporate loan during the year for general corporate purposes, the terms of sanction for which does not specify stipulations regarding the purpose for which the same is to be applied.

xvii. On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the explanations given to us, there are no funds raised on a short term basis which have been used for long term investments.

xviii. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

xix. No debentures have been issued by the company during the year and thus creation of securities for the same is not applicable to the company.

xx. The clause as regards end-use of the funds raised by way of issue of equity shares is not applicable for the year.

xxi. As explained to us and based on our examination of the books and records of the company carried out in accordance with generally accepted auditing practices in India, no fraud on or by the Company has been noticed or reported during the course of our audit.

for VASAN & SAMPATH, Chartered Accountants Firm Registration Number:004542S

(Unnikrishnan M)

Place: Bangalore Partner

Date: 4th September, 2012 Membership No : 205703


Mar 31, 2010

1. We have audited the attached balance sheet of M/s EOGIX MICROSYSTEMS LIMITED, BANGALORE ("the Company") as at March 31,2010 and the profit & loss account and 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.

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 misstatements. 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 bv management, as well as evaluating the overall financial statements. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) Order, 2004, issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Companies Act, 1956, we further enclose in the annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable to the Company.

4. We further report that:

(i) In the absence of a comprehensive system of documentation for recording the stage of completion and related costs, we are unable to comment on the basis of valuation of software products work-in-progress valued at Rs. 1.98 crores & Rs.6.31 crores as at 31st March 10& 31st March 09 respectively and its consequent impact, if any, on the Profit & Loss account and Balance Sheet.

(ii) As detailed in Note No 13(b) in Schedule 22, the remuneration paid to the managing director is in excess of limits prescribed under the Schedule XII of the Companies Act by an amount of Rs. 0.41 Crores. The company has not obtained the prior approval of the central government for the same.

(iii) Long term investments as at the Balance Sheet date include Rs. 116 crores in wholly owned subsidiaries at US and Belgium, which are carried at cost. We are given to understand that the accounts of the same are not subject to audit or limited review. In the absence of independently reviewed / audited financial statements in respect of these subsidiaries (including their step down subsidiaries), we are unable to carry out necessary procedures to reliably examine if there has been a permanent decline in the carrying value of the stated investments. We are therefore unable to comment on the impact, if any, on the Profit & Loss account and the adequacy of Reserve for Diminution in value of long term Investments as at the Balance Sheet date.

5. Subject to the above and further to our comments in the Annexure referred to in paragraph 4 above, 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 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 appears from our examination of those books;

(c) the Balance Sheet and the Profit and Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of account;

(d) in our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet, the Profit & Loss account and the 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 except as regards accounting for Super Annuation expenses on a cash basis as disclosed in Note A(j) in Schedule 22.

5. Subject to above and further subject to the Notes on accounts in general and in particular Note 6 of Schedule 22, as regards non-disclosure of Statement of Investments as required, in our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and the Profit and Loss Account and Cash Flow Statement read together with the notes thereon 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 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.

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

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

ANNEXURE TO THE Auditors Report

THE ANNEXURE REFERRED TO IN THE AUDITORS REPORT TO THE MEMBERS OF LOGIX MICROSYSTEMS LIMITED ("THE COMPANY") FOR THE YEAR ENDED MARCH 31,2010.

i. Fixed Assets:

a) We are given to understand that, the Company is in the process of updating its records showing full particulars including quantitative details and situation of its Fixed Assets.

b) The Company has a regular system of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of 3 years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets, subject to a need for strengthening of the process of reconciliation with the fixed assets register. No Material discrepancies were noticed on verification during the year.

c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

tii. Inventory:

a) According to information and explanations given to us, the management has conducted physical verification of inventory at reasonable intervals.

b) In our opinion and according to the information and explanation given to us, the procedure being followed by the management with regard to physical verification of inventory is reasonable and adequate in relation to the size of the company and the nature of its business.

c) In our opinion and according to the information and explanations given to us, the company has maintained proper records of inventory. As explained to us, no material discrepancies were noted on physical verification.

iii. During the year, the company has neither granted nor taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently the related clauses iii (b, c, d, f & g) are not applicable.

iv. In our opinion and according to information and explanations given to us, having regard to the explanations that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of material and fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the company carried out in accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have not observed nor have been informed of any continuing failure to correct major weaknesses in internal controls in these areas.

v. a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

b) In our opinion and according to information and explanations given to us, there are no transactions made in pursuance of such contracts or arrangements and exceeding Rs. 5 lacs in respect of any party during the year, which have been made at prices which are not reasonable having regard to the prevailing market prices at the relevant time.

vi. The Company has not accepted deposits from the public during the year and thus the provisions of section 58A and 58AA is not applicable.

vii. Though the company has an internal audit process, the same is to be strengthened to make it commensurate with the size and nature of its business.

viii. The Central Government has not prescribed die maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for any of the Services rendered by the Company.

ix. a) The Company is generally regular in depositing undisputed applicable statutory dues including Provident Fund, Sales tax, Wealth Tax, Custom Duty, Cess and other statutory dues with the appropriate authorities subject to certain delays in remittance of Tax deducted at Source and Service Tax. There were no related amounts outstanding for a period exceeding six months from the date they became payable as at the year-end.

b) In our opinion and according to information and explanations given to us, there are no dues of Provident Fund, Wealth Tax, Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, Cess which have not been deposited on account of any dispute.

x. The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

xi. According to the information and explanations given to us and on the basis of examination of books of accounts, the Company has not defaulted in repayment of dues to financial institutions or banks during the year.

xii. Adequate documents and records are maintained in cases where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/society.

xiv. The Company makes investments in Shares, Mutual Fund units and other Investments for which proper records have been maintained for the transactions and contracts; and timely entries have been made for the same. These investments have been held by the company in its own name. The investment register required to be maintained under Section 372A (5) (a) of the Companies Act is in the process of being updated.

xv. As explained to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

xvi. In our opinion, and according to the information and explanations given to us, on an overall basis, during the year, the term loans taken by the Company have been applied for the purposes for which tfiey were obtained.

xvii. On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the explanations given to us, there are no funds raised on a short term basis which have been used for long term investments.

xviii. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraph 4 (xix) of the Order is not applicable.

xix. No debentures have been issued by the company during the year and thus creation of securities for the same is not applicable to the company.

xx. The end-use of the funds raised by way of issue of equity shares have been disclosed in the notes forming part of the financial statements.

xxi. As explained to us and based on our examination of the books and records of the company carried out in accordance with generally accepted auditing practices in India, no fraud on or by the Company has been noticed or reported during the course of our audit..

for VASAN & SAMPATH,

Chartered Accountants

Firm Registration Number: 004542S

(Unnikrishnan M)

Place: Bangalore Partner

Date: September 4th, 2010 Membership No : 205703

 
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