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Auditor Report of Zylog Systems Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Zylog Systems limited (the Company) which comprise the Balance sheet as at 31st March 2015, the Statement of Profit and Loss and the Cash flow Statement for the year then ended and a summary of the 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 of these standalone financial statements to 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 and Accounting standard 30,financial instruments: Recognition and Measurement issued by the Institute of Chartered Accountants of India to the extent it does not contradict any other Accounting standard referred to in section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility 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 and implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuing 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

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provision 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 and authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those standards and pronouncements 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 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 financial control relevant to the company's preparation and fair presentation 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 whether the company has in place an adequate internal financial control system over financial supporting and the operative 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 standalone financial statements.

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the 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 as at 31st March 2015

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

c) in the case of the Cash flow statement of the cash flows of the company 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, and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs3 and 4 of Order

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 standalone financial statements comply with the Accounting Standards notified in section 133 of the Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules2014. And Accounting Standard 30 financial Instruments: Recognition and Measurement issued by the Institute of Chartered Accountants of India to the extent that does not contradict any other accounting standard referred to in sec 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 except in respect of non provision of gratuity

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

f) With respect to 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 o the best of our knowledge and belief and according to the information and explanation given to us

I. The company has disclosed the impact of pending litigations as at 31st March 2015 on its financial position in its standalone financial statement.

II. The company has not transferred any amounts, required to be transferred, to the Investor Education and Protection Fund by the company during the year ended 31st March 2015.

III. The company has not complied sec 205 A of the Companies Act, 1956 in respect of unpaid dividend for the financial year 2011-12 of Rs.14,08,63,114 and this sum has still not been deposited in any scheduled bank as mentioned in the notes on accounts. (Refer Note # 2.37) IV. The advances include Rs.188 Lakhs receivable from Ex-Chairman of the company.

V. We have been not given satisfactory explanation/ evidence for the utilization of Rs.131.36 crores, the amounts received through GDR. We have also reported about the same in our last year report. We have been furnished by the management the necessary forms for allotment of shares for Rs.131.36 crores.

Referred to in paragraph I under the heading of 'report on other Legal and Regulatory requirements' of our report of even dated to the Members of Zylog Systems Limited on the standalone financial statements as of and for the year ended 31st March 2015.

1) In respect of its fixed assets,

a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No materials discrepancies were noticed on such physical verification.

c) In our opinion, the company has not disposed off a substantial part of the fixed assets during the year and the going concern status of the company is not affected.

2) The company is a software development company and hence this clause is not applicable to this company.

3) According to the information and explanations given to us, the company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of Clause 3(iii) (a) and (b) of the order are not applicable to the company and hence not commented upon.

4) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of fixed assets and for sale of services. During the course of our audit, we have not observed any major weakness in such internal control system.

5) According to the information and explanations given to us, the Company has not accepted any deposit from the public. Therefore, the provisions of Clause (v) of the Order are not applicable to the Company and hence not commented upon.

6) According to the information and explanations given to us, the Central Government has not prescribed cost records for the products manufactured by this company and hence the provisions of clause (vi) of the order are not applicable to the Company and hence not commented upon.

7) In respect of statutory dues:

a. According to the records of the Company, the company generally not depositing undisputed statutory dues including Provident Fund, Investor Education and protection Funds, Employees' State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, and other statutory dues with the appropriate authorities.

b. According to the information and explanations given to us, undisputed amounts payable of Rs. 501.75 lacs in respect of the aforesaid dues were outstanding as at March 31, 2015 for a period of more than six months from the date of becoming payable. Further the company also not depositing tax deducted at source regularly with the appropriate authorities.

c. Details of Income tax, Sales tax and service tax which have not been paid / deposited as on 31st March 2015 on account of disputes are given below.

Disputed statutory dues unpaid as on 31st Mar 2015

Forum where the dues of Period to which

Statute Amount rupees dispute is pending amount relates

The Income Tax Act, 1961 CIT (Appeals) AY 2001-02 31,49,091

The Income Tax Act, 1961 CIT (Appeals) AY 2004-05 54,24,063

The Income Tax Act, 1961 CIT (Appeals) AY 2005-06 99,11,812

The Income Tax Act, 1961 CIT (Appeals) AY 2006-07 1,60,76,919

The Income Tax Act, 1961 CIT (Appeals) AY 2007-08 24,71,78,861

The Income Tax Act, 1961 CIT (Appeals) AY 2007-08 1,05,12,138

The Income Tax Act,1961 CIT (Appeals) AY 2008-09 57,33,54,450

The Income Tax Act, 1961 Appellate Tribunal AY 2009-10 35,95,04,941

The Income Tax Act, 1961 CIT (Appeals) AY 2010-11 43,36,02,221

TN General Sales Tax Act Commercial Taxes Dept. 2004-05 19,34,000

Karnataka Commercial Tax Act High Court, Karnataka 2009-10 25,42,074

Service Tax under the Commissioner of Service Tax 2009-10 64,98,343 Finance Act 1994

d. There are no Amounts required to be transferred to investor Education and Protection Fund in accordance with the provisions of the Act and rules made there under and the clause (vii)(C) is not applicable to this company and hence not commented upon.

8) The Company has accumulated losses and at the end of the financial year 31st March 2015 it is Rs 14,492.39 lacs /-. The Company has incurred cash loss of Rs 47,827.85 lacs during the financial year covered by the audit and also incurred cash loss of Rs 19,234.86 lacs in the immediate preceding financial year.

9) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the Company has defaulted in repayment of dues to financial institutions, banks and the list is given here under.

Name of banks/financial institutions Amount (Rs. In Lacs)

Syndicate Bank – PCFC / Corporate Loan 16603.35

State Bank of Mauritius – PC Loan 5,648.88

Union Bank of India – ECB / PCFC / Term Loan 32,097.92

ICICI Bank – ECB / PCFC Loan 5,720.96

Indian Overseas Bank 2,500.00

Dena Bank 9,742.06

Federal Bank Limited 2495.32

SIDBI (Unsecured Loan) 337.06

Reliance Capital Limited 1100.00

Hire Purchase (HPFS / IBM) 532.71

SREI Equipment Finance Pvt Ltd 999.00

L & T Finance Ltd 3000.00

Total 80,777.26

10) According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks and financial institutions.

11) The Company has not raised any term loan during the year. Hence the clause (xi) is not applicable to this company and hence not commented upon.

12) According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

For Ramadoss & Co.

Firm Regn No 002879S

Chartered Accountants

s/d

K. Ramadoss Partner

Membership No.019176


Mar 31, 2014

We have audited the accompanying Financial Statements of Zylog Systems Limited ("the Company") which comprises of Balance sheet as at 31st March 2014, the Statement of Profit and Loss and the Cash flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory notes.

Management''s Responsibility for the financial statements

The Company''s 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 Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 (the Act) read with, the General. Circular 15/2013dated 13th September 2013 of the Ministry of Corporate affairs in respect of section 133 of the Companies Act 2013 and General Circular 08/2014 dated 4th April 2014 with respect to the financial statements and in accordance with the accounting principles generally accepted in India. 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

Our responsibility js 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 the disclosures in the financial statements. The procedures selected depend on the auditors'' judgement 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 company''s internal control. An audit also includes evaluating the appropriateness of the 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 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 subject to:.

1) non compliance of Section 205 A of the companies Act, 2013 in respect of unpaid dividend for the financial year 2011-12 of Rs.14.09 crores.(including promoters share) has not been deposited in any scheduled bank as mentioned in para 2.37 of Notes on accounts.

2) Form 2 has not been filed for the allotment of shares during the year to the tune of 131.36 crores in respect of GDR issue (refer notes Para 2).

3) We are not satisfied with the evidence providing during the year regarding GDR Shares'' receipts and utilization.

4) The minutes books of the company were not available for our verification.

a) in the Case of the Balance Sheet of the State of affairs as at 31st March 2014.

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

c) in the case of the Cash flow statement of the 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,2003 (the order) Issued by the Central government in terms of Section 227 (4A) of the Companies Act, 2013, we give in the .Annexure a statement on the matters specified in paragraphs 4 and 5 of Order

2. 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 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 Balance Sheet, the Statement of the Profit and Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 read with GeneralCircularl5/2013dated 13th September 2013 of the Ministry of Corporate affairs in respect of section 133 of the. Companies''Act 2013 and in respect of gratuity the provision has been made on an estimated basis.

e) On the basis of written representations received from the directors as at 31st March 2014 and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March 2014 from being appointed as a director in terms of Clause (g) of subsection (1) of Section 274 (1) (g) of the Act on the said date.

For Ramadoss & Co. Chartered Accountants Firm Regn No 002879S

-s/d- K. Ramadoss Partner Membership No.019176


Mar 31, 2013

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

Management''s responsibility to the financial Statements

The Company''s Management is responsible for the preparation of these financial statements that gives a true and fair view of the financial position, financial performance and cash flows of the company in accordance with the Accounting Standards referred to in section 211 (3C) of the Companies Act. 1956 (''the Act'') and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation 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

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards 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 Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as valuating 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 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 subject to non compliance of Section 205 A of the companies Act, 1956 in respect of unpaid dividend for the financial year 2011-12 of Rs. 14,20,40,520/- has not been deposited in any scheduled bank as mentioned in para 2.38 of Notes on accounts.

(a) in the case of the Balance sheet , of the state of affairs of the Company as at 31st March 2013;

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

(c) In the case of the Cash flow Statement, of the Cash flows of the Company for the year ended on that date.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' Report) Order, 2003 ("the order) issued by the Central government in terms of Section 227(4A) of the Act, we give in the Annexure a Statement on the matters specified in paragraphs 4 and 5 of the said order.

2. As required by Section 227(3) of the Act, we report that,

(a) We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of accounts 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 Balance Sheet, the Statement of Profit and Loss and the Cash flow Statement comply with the Accounting standards referred to in section 211(3C) of the Act.

(e) On the basis of written representation received from the directors as at 31st March 2013, taken on record by the Board of Directors, none of the Directors is disqualified as at 31st March 2013 from being appointed as a director in terms of section 274(1)(g) of the Act.

Annexure to the Independent Auditors'' Report

(Referred to in paragraph I under Report on other Legal and Regulatory requirements Section of our report of even date)

i) In respect of fixed assets:

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

b) The fixed assets were physically verified by the management according to a phased program which, in our opinion, is reasonable having regard to the size of the company and nature of business.

c) No fixed assets have been disposed off during the year under review which would give rise to the question of whether the status of the company has been impaired as a going concern.

ii) In respect of Inventories,

The company''s main business is development of software. This doesn''t require any raw materials and the finished products are not identifiable and not measurable. Hence the paragraph of this order is not applicable.

iii) In respect of loans 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 Companies Act, 1956 except to its wholly owned subsidiaries. Accordingly, causes (iii) (b), (iii) (c) and (iii) (d) of paragraph 4 of the Order are not applicable for the year.

iv) The company has taken secured loan from a company covered in the Register maintained under section 301 of the Act. We have been informed that there are no terms regarding interest or repayment of principal and hence we are not in a position to comment whether these are prejudicial to the interest of the company or not.

No of Parties One

Amount involved Rs. 53,40,10,738/-

Max outstanding during the year Rs. 53,40,10,738/-

Balance as on 31st March 2013 Rs. 53,40,10,738/-

v) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory, and fixed assets and for sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

vi) In our opinion and according to the information and explanations given to us, there are no contracts or arrangements the particulars of which need to be entered into the register maintained in pursuance of section 301 of the Companies Act. Accordingly the requirements prescribed by paragraph 4(v) of the order are not applicable.

vii) According to the information and explanations given to us, the Company has not accepted any deposit from the public. Therefore the provisions of Clause (vi) of paragraph 4 of the Order are not applicable to the Company.

viii) In our opinion and according to explanations given to us, the company has an internal audit system commensurate with the size and nature of its business.

ix) We have been informed by the company that the Central Government has not prescribed the maintenance of cost accounts under section 209 (1)(d) of the Companies Act, 1956 and rules made there under.

x) According to the information and explanations given to us in respect of statutory dues:

a. According to the records of the Company, generally been not regular in depositing undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income- Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess, and other statutory dues.

b. According to the information and explanations given to us, the Tax deducted at source of ''1,29,97,158/ in arrears as on 31st march 2013 for a period of more than six months from the date they became payable.

c. Details of Income tax, Sales tax and service tax which have not been paid /deposited as on 31st March 2013 on account of disputes are given below.

Disputed statutory dues unpaid as on 31st Mar 2013

Amount in Rs.

Forum where the dues of Period to which Statute Amount rupees dispute is pending amount relates

The Income Tax Act, 1961 CIT (Appeals) AY 2004-05 5,424,063

The Income Tax Act, 1961 CIT (Appeals) AY 2005-06 9,911,812

The Income Tax Act, 1961 CIT (Appeals) AY 2006-07 16,076,919

The Income Tax Act, 1961 CIT (Appeals) AY 2007-08 92,981,412

The Income Tax Act, 1961 Appellate Tribunal AY 2009-10 359,504,941

The Income Tax Act, 1961 CIT (Appeals) AY 2010-11 433,602,221

TN General Sales Tax Act Commercial Taxes Dept. 2004-05 1,934,000

Service Tax under the Commissioner of Service Tax 2009-10 6,498,343 Finance Act 1994

Karnataka Commercial tax act High Court, Karnataka 2009-10 2,542,074

xi) The Company has no accumulated losses at the end of the financial year. The Company has not incurred cash loss during the financial year covered by the audit and has not incurred cash loss in the immediate preceding financial year.

xii) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the Company has defaulted in repayment of dues to banks/financial institutions/finance companies of the principal of Rs. 14380.61 lacs and interest of Rs. 2993.19 lacs.

(Rs.in lakhs)

Bank Name Principal Due Period Due Interest Due Period Due

Syndicate Bank - cash credit - 4.90 Feb''13 - Mar''13

Syndicate Bank - PC Loan - 713.88 Jan''13 - Mar''13

Syndicate Bank - PCFC Loan - 457.32 Jan''13 - Mar''13

State Bank of Mauritius - PC Loan - 170.46 Jan''13 - Mar''13

Syndicate Bank - Corporate Loan 625.00 Mar''13 159.83 Jan''13 - Mar''13

Union Bank of India - Term Loan III 100.00 Jan''13 19.67 Jan''13 - Mar''13

Union Bank of India - ECB Loan 170.39 Feb''13 168.27 Jan''13

Indian Overseas Bank 2500.00 Dec''12 286.03 Apr''12

Federal Bank Limited 2500.00 277.17 May''12 - Mar''13

SIDBI (Unsecured Loan) - Bill 337.06 - Jan''13 - Mar''13 discounting Loan

Reliance Capital Limited 1100.00 88.72 Sep''12 - Mar''13

HPFS 476.71 Jun''12 30.77 Jun''12

IBM 2572.45 Apr''12 205.81 Apr''12

SREI Equipment Finance Pvt Ltd 999.00 Oct''12 79.70 Oct''12

L & T Finance Ltd 3000.00 Sep''12 330.66 Jun''12

Total 14380.61 2993.19

xiii) In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiv) In our opinion, the company is not a chit fund / nidhi / mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

xv) The Company has not dealing or trading in shares, securities, debentures and other investments and hence paragraph 4(xiii) of the other is not applicable. Therefore, the provisions of clause (xiv) of paragraph 4 of the Order are not applicable to the Company.

xvi) The Company has not given guarantees for loans taken by others from banks and financial institutions. Therefore, the provisions of clause (XV) of paragraph 4 of the Order are not applicable to the Company.

xvii) The Company has raised new terms loan of Rs.126.18 Cores during the year. The term loans outstanding at the beginning of the year and those raised during the year have been applied for the purposes for which they are raised.

xviii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short term basis that have been used for long term investment.

xix) 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.

xx) The Company has not raised any debentures. Therefore, the provisions of clause (XIX) of paragraph 4 of the Order are not applicable to the Company.

xxi) The Company has not raised any monies by way of public issues during the year and hence paragraph 4(XX) of the order is not applicable to this company.

xxii) In our opinion and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

For Ramadoss & Co.

Chartered Accountants

Firm Regn No 002879S

-s/d-

K. Ramadoss

Partner

Membership No.019176

Place : Chennai

Date : Febraury 14, 2014


Mar 31, 2012

1. We have audited the attached balance sheet of Zylog Systems Limited ("the Company") as at March 31, 2012, the statement of profit and loss and also the 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 misstatement. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit 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. As required by the Companies (Auditor's Report) Order, 2003, as amended, by the Companies (Auditor's Report) (Amendment) Order, 2004 issued by the Central Government 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 paragraph 4 & 5 of the said order.

4. Based on the written representations received from the directors as on March 31,2012 and considered by the board, we report that none of the directors is disqualified from being appointed as a director as on March 31,2012 , in terms of section 274 (1) (g) of the Companies Act, 1956.

5. Further to our comments in the annexure referred to in paragraph 3 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 purpose of the audit;

(b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books; and proper returns adequate for the purpose of our audit have been received from the branch in United States.The branch auditor's report has also been forwarded to us which was appropriately dealt with.

(c) The balance sheet, statement of profit and loss and the cash flow statement dealt with by this report are in agreement with the books of account and with the audited returns from the branch.

(d) In our opinion, the balance sheet, statement of profit and loss and cash flow statement dealt with by this report comply with accounting standards referred to in sub section (3C) of section 211 of the Companies Act, 1956.

(e) In our opinion and to the best of our information and according to the explanations given to us,the said accounts give the information as 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 March 31, 2012;

(ii) in the case of the Statement of Profit and Loss account,of the profit of the Company for the year ended on that date; and

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

Annexure Referred To In Paragraph 3 of the Auditors'Report

1. The provisions of Clauses of Paragraph 4 of the Companies (Auditor's Report) Order, 2003 as amended listed below are not applicable to the Company for the year.

a) Clause 4 (viii) regarding maintenance of cost records under Section 209(1)(d) of the Companies Act,1956 is not applicable since no Cost records have been prescribed.

b) Clause 4 (xiii) regarding special statute applicable to Chit Funds and Nidhis / Mutual Benefit Fund and Societies since the Company does not carry on such businesses.

2. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.The fixed assets of the Company have been physically verified by the management according to a phased program which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

3. No fixed assets have been disposed off during the year under review which would give rise to the question of whether the status of the Company has been impaired as a going concern.

4. The company is rendering InformationTechnology related services.While majority of the activities of the company does not require holding any inventory,the company has projects of executing e-governance projects for State Governments. As part of project implementation,the company buys pre-enabled smart cards and issues them to the State Governments for the execution of the projects.This is considered to be an item of stores inventory.The company has carried out a physical verification of the inventory which procedures are reasonable in relation to the size of the company and the nature of its business.The company has maintained proper records of inventory and no discrepancies were noticed on physical verification.

5. The Company has not given any loans,secured or unsecured,to any company, firm or other parties listed in the Register maintained under section 301 of the Act except to its wholly owned subsidiaries. Accordingly, clauses (iii) (b), (iii) (c) and (iii) (d) of paragraph 4 of the Order are not applicable for the year.

6. The Company has not taken any loans, secured or unsecured, from any company, firm or other parties listed in the Register maintained under section 301 of the Act.Accordingly, clauses (iii) (e), (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable for the year.

7. In our opinion and according to the information and explanation given to us, there are no contracts or arrangements the particulars of which need to be entered into the register maintained in pursuance of section 301 of the Companies Act.Accordingly, the requirements prescribed by paragraph 4 (v) of the Order are not applicable.

8. There is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of services.There is no continuing failure to correct major weaknesses in internal control system.

9. The company has not accepted any deposits from the public and hence the requirements prescribed by paragraph 4 (vi) of the Order are not applicable.

10. In our opinion and according to explanations given to us,the Company has an internal audit system commensurate with the size and nature of its business

11. (a) According to the information and explanations furnished to us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, ESI, IncomeTax,SalesTax,Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it although there have been slight delays in a few cases. There are no dues to be paid into the"Investor Education Protection Fund".There were no arrears as at 31st March 2012 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the following are the dues unpaid in respect of Income Tax, Sales Tax,Wealth Tax, Service Tax, Customs Duty and Excise Duty on account of disputes.

Statute Nature of the Dues Amt in lakhs Period to which Forum where the Dues amount relates of rupees dispute is pending

The Income Tax Act, 1961 Disallowance of expenses 16.22 AY 2001-02 Appellate Tribunal

The Income Tax Act, 1961 Disallowance of expenses 91.00 AY 2002-03 Appellate Tribunal

The Income Tax Act, 1961 Disallowance of expenses 3820.05 AY 2009-10 CIT (Appeals)

TN General Commercial Taxes Sales tax Act. Sales tax demand 19.32 2004-2005 Department

Service Tax under Wrong availment Commissioner of the Finance Act, 1994 of Cenvat credit 77.69 2009-10 Service Tax

12. The Company has no accumulated losses as at March 31, 2012. The Company has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

13. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks.There are no borrowings from financial institutions.

14. The requirements prescribed under Clause 4 (xii) regarding loans granted against pledge of shares and securities etc. are not applicable since the Company has not granted such loans.

15. The requirements prescribed under Clause 4 (xiv) regarding dealing or trading in shares, securities, debentures or other investments etc. are not applicable since the Company does not deal or trade in them.

16. The company has given guarantees for loans taken on behalf of its subsidiaries to banks. In our opinion, the terms and conditions are not prejudicial to the interest of the company.

17. In our opinion and according to the information and explanations given to us, the term loans raised have been used for the purpose for which the loans were obtained.

18. According to the information and explanation given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short term basis have been used for long term investment by company.

19. According to the information and explanation given to us, the Company has not made any preferential allotment of shares to the parties and companies covered in the register maintained u/s 301 of the Companies Act 1956.

20. The requirements prescribed under Clause 4 (xix) regarding creation of securities in respect of debentures are not applicable since no issue of debentures has been made.

21. The Company has not raised any money by public issue during the year.

22. According to the information and explanations given to us,no fraud on or by the Company has been noticed or reported during the year under audit.

For Brahmayya &Co

Chartered Accountants Chennai Firm Reg No:000511S

May 25, 2012

P S Kumar

Partner Membership No. 15590


Mar 31, 2011

1. We have audited the attached balance sheet of Zylog Systems Limited as at March 31, 2011, the profit and loss account and also the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the 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 misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit 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. As required by the Companies (Auditor's Report) Order, 2003, as amended, by the Companies (Auditor's Report) (Amendment) Order, 2004 issued by the Central Government 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 paragraph 4 & 5 of the said order.

4. Based on the written representations received from the directors as on 31.03.2011 and considered by the board, we report that none of the directors is disqualified from being appointed as a director as on 31.03.2011, in terms of section 274 (1) (g) of the Companies Act, 1956.

5. 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 purpose of the audit;

(b) In our opinion proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books; and proper returns adequate for the purpose of our audit have been received from the branch in United States. The branch auditor's report has also been forwarded to us which was appropriately dealt with.

(c) The balance sheet, profit and loss account and the cash flow statement dealt with by this report are in agreement with the books of account and with the audited returns from the branch.

(d) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with accounting standards referred to in sub section (3C) of section 211 of the Companies Act, 1956.

(e) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give in the prescribed manner, the information as required by the Companies Act, 1956 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 March 31, 2011;

(ii) in the case of the profit and loss account, of the profit of the Company for the year ended on that date; and

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

1. The provisions of Clauses of Paragraph 4 of the Companies (Auditor s Report) Order, 2003 as amended listed below are not applicable to the Company for the year.

a) Clause 4 (viii) regarding maintenance of cost records under Section 209(l)(d) of the Companies Act, 1956 is not applicable since no Cost records have been prescribed.

b) Clause 4 (xiii) regarding special statute applicable to Chit Funds and Nidhis / Mutual Benefit Fund and Societies since the Company does not carry on such businesses.

2. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. The fixed assets of the Company have been physically verified by the management according to a phased program which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

3. No fixed assets have been disposed off during the year under review which would give rise to the question of whether the status of the Company has been impaired as a going concern.

4. The Company is primarily a service company rendering information technology services. Accordingly it does not hold any inventory as at March 31,2011 and hence the provisions of clause 4 (ii) of the Companies (Auditors' Report) Order, 2003 are not applicable to the Company. The company is also in the business of executing e-governance projects with State Governments and as part of the project purchases pre-enabled smart cards and issues them to the State Government agencies for processing. As the cards are issued on purchase, they are treated as consumed and hence no inventory records are maintained nor valued as inventory.

5. The Company has not given any loans, secured or unsecured, to any company, firm or other parties fisted in the Register maintained under section 301 of the Act except to its wholly owned subsidiaries. Accordingly, clauses (iii) (b), (iii) (c) and (iii) (d) of paragraph 4 of the Order are not applicable for the year.

6. The Company has not taken any loans, secured or unsecured, from any company, firm or other parties listed in the Register maintained under section 301 of the Act. Accordingly, clauses (iii) (e), (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable for the year.

7. In our opinion and according to the information and explanation given to us, there are no contracts or arrangements the particulars of which need to be entered into the register maintained in pursuance of section 301 of the Companies Act. Accordingly, the requirements prescribed by paragraph 4 (v) of the Order are not applicable.

8. There is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of services. There is no continuing failure to correct major weaknesses in internal control system.

9. The company has not accepted any deposits from the public and hence the requirements prescribed by paragraph 4 (vi) of the Order are not applicable.

10. In our opinion and according to explanations given to us, the Company has an internal audit system commensurate with the size and nature of its business.

11. (a) According to the information and explanations furnished to us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, ESI, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it although there have been slight delays in a few cases. There are no dues to be paid into the "Investor Education Protection Fund". There were no arrears as at 31st March 2011 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the following are the dues unpaid in respect of Income Tax, Sales Tax and on account of disputes.

Statute Nature of the Amt in lakhs Period to which Forum where the Dues of rupees amount relates dispute is pending

Income Tax Disallowance of expenses 110.00 AY 2001-02 Appellate Tribunal

Income Tax Disallowance of expenses 9.10 AY 2002-03 Appellate Tribunal

Income Tax Disallowance of expenses 208.00 AY 2003-04 Appellate Tribunal

Income Tax Disallowance of expenses 998.00 AY 2008-09 CIT (Appeals)

TN General Sales tax demand 19.30 2004-05 Commercial Taxes Sales Tax Act. Department

12. The Company has no accumulated losses as at March 31, 2011. The Company has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

13. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. There are no borrowings from financial institutions.

14. The requirements prescribed under Clause 4 (xii) regarding loans granted against pledge of shares and securities etc. are not applicable since the Company has not granted such loans.

15. The requirements prescribed under Clause 4 (xiv) regarding dealing or trading in shares, securities, debentures or other investments etc. are not applicable since the Company does not deal or trade in them.

16. The company has given guarantees for loans taken on behalf of its subsidiaries to banks. In our opinion, the terms and conditions are not prejudicial to the interest of the company.

17. In our opinion and according to the information and explanations given to us, the term loans raised have been used for the purpose for which the loans were obtained.

18. According to the information and explanation given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short term basis have been used for long term investment by company

19. According to the information and explanation given to us, the Company has not made any preferential allotment of shares to the parties and companies covered in the register maintained u/s 301 of the Companies Act 1956.

20. The requirements prescribed under Clause 4 (xix) regarding creation of securities in respect of debentures are not applicable since no issue of debentures has been made.

21. The Company has not raised any money by public issue during the year.

22. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year under audit.

For Brahmayya & Co Chartered Accountants

Firm Regn.No.000511S Chennai 27th May 2011 P S Kumar

Partner

Membership No. 15590






Mar 31, 2010

1. We have audited the attached balance sheet of Zylog Systems Limited as at March 31, 2010, the profit and loss account and also the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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 financial statements. An audit 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. As required by the Companies (Auditors Report) Order, 2003, as amended, by the Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government 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 paragraph 4 & 5 of the said order.

4. Based on the written representations received from the directors as on 31.03.2010 and considered by the board, we report that none of the directors is disqualified from being appointed as a director as on 31.03.2010, in terms of section 274 (1) (g) of the Companies Act, 1956.

5. 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 purpose of the audit;

(b) In our opinion proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books; and proper returns adequate for the purpose of our audit have been received from the branch in United States.The branch auditors report has also been forwarded to us which was appropriately dealt with.

(c) The balance sheet, profit and loss account and the cash flow statement dealt with by this report are in agreement with the books of account and with the audited returns from the branch.

(d) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with accounting standards referred to in sub section (3C) of section 211 of the Companies Act, 1956.

(e) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give in the prescribed manner, the information as required by the Companies Act, 1956 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 March 31, 2010;

(ii) in the case of the profit and loss account, of the profit of the Company for the year ended on that date; and

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

Annexure Referred To In Paragraph 4 of the Auditors Report

1. The provisions of Clauses of Paragraph 4 of the Companies (Auditors Report) Order, 2003 as amended listed below are not applicable to the Company for the year.

a) Clause 4 (viii) regarding maintenance of cost records under Section 209(l)(d) of the Companies Act, 1956 is not applicable since no Cost records have been prescribed.

b) Clause 4 (xiii) regarding special statute applicable to Chit Funds and Nidhis / Mutual Benefit Fund and Societies since the Company does not carry on such businesses.

2. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. The fixed assets of the Company have been physically verified by the management according to a phased program which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

3. No fixed assets have been disposed off during the year under review which would give rise to the question of whether the status of the Company has been impaired as a going concern.

4. The Company is primarily a service company rendering information technology services. Accordingly it does not hold any inventory as at March 31,2010 and hence the provisions of clause 4 (ii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

5. 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. Accordingly, the requirements prescribed under paragraph 4 (iii) of the Order are not applicable.

6. In our opinion and according to the information and explanation given to us, there is an adequate internal control system commensurate with size of the Company and the nature of its business for purchase of fixed assets and consumables, and for sale of services. We have not observed any continuing failure to correct major weaknesses in internal control system.

7. In our opinion and according to the information and explanation given to us, there are no contracts or arrangements the particulars of which need to be entered into the register maintained in pursuance of section 301 of the Companies Act. Accordingly, the requirements prescribed by paragraph 4 (v) of the Order are not applicable.

8. The company has not accepted any deposits from the public and hence the requirements prescribed by paragraph 4 (vi) of the Order are not applicable.

9. In our opinion and according to explanations given to us, the Company has an internal audit system commensurate with the size and nature of its business.

10. (a) According to the information and explanations furnished to us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it. The Company is yet to register itself under the Employees State Insurance Act. There are no dues to be paid into the "Investor Education Protection Fund".

(b) According to the information and explanations furnished to us, no undisputed amounts in respect of Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, and other material statutory dues applicable to it were in arrears as at 31st March 2010 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, the following are the dues unpaid in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty and Excise Duty on account of disputes.

Name of the Statute Amount (Rs.) Period to which amount relates Forum where the dispute is pending

The Income Tax Act, 1961 1.10 crores AY 2001-02 The Income Tax Appellate Tribunal.

The Income Tax Act, 1961 9.10 lakhs AY 2002-03 The Income Tax Appellate Tribunal.

The Income Tax Act, 1961 2.08 crores AY 2003-04 Commissioner of Income Tax (Appeals).

The Income Tax Act, 1961 5.03 crores AY 2006-07 Commissioner of Income Tax (Appeals).

The Income Tax Act, 1961 3.07 crores AY 2007-08 Commissioner of Income Tax (Appeals). Tamil Nadu General

Sales Tax Act, 1959 19.30 lakhs AY 2004-05 Commercial Taxes Department

11. The Company has no accumulated losses as at March 31,2010. The Company has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

12. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. There are no borrowings from financial institutions.

13. The requirements prescribed under Clause 4 (xii) regarding loans granted against pledge of shares and securities etc. are not applicable since the Company has not granted such loans.

14. The requirements prescribed under Clause 4 (xiv) regarding dealing or trading in shares, securities etc. are not applicable since the Company does not deal or trade in shares, securities etc.

15. The company has given guarantees for loans taken on behalf of its subsidiaries to banks. In our opinion, the terms and conditions are not prejudicial to the interest of the company.

16. In our opinion and according to the information and explanations given to us, the term loans raised have been used for the purpose for which the loan were obtained.

17. According to the information and explanation given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short term basis have been used for long term investment by company

18. According to the information and explanation given to us, the Company has not made any preferential allotment of shares to the parties and companies covered in the register maintained u/s 301 of the Companies Act 1956.

19. The requirements prescribed under Clause 4 (xix) regarding creation of securities in respect of debentures are not applicable since no issue of debentures has been made.

20. The Company has not raised any money by public issue during the year.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year under audit.

For Brahmayya & Co Chartered Accountants Chennai Firm Reg No:0051 IS

May 21, 2010

P S Kumar

Partner

Membership No. 15590

 
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