Mar 31, 2016
To the Members of Zylog Systems Limited
REPORT ON THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Zylog Systems Limited (the Company) which comprise the Balance sheet as at 31st March 2016, 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.
MANAGEMENTâS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Companyâs Board of directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) 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.
AUDITORSâ 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 auditorsâ 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 companyâs 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 Companyâs 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.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1.As required by the Companies (Auditorâs Report ) Order,2015 (â the orderâ) 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 paragraphs 3 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) Rules 2014. 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 and interest relating to all borrowings.
e) On the basis of written representations received from the directors as at 31st March 2016 and taken on record by the Board of Directors, none of the Directors are disqualified as at 31st March 2016 from being appointed as a director in terms of Section 164 (2) of the Act.
f) Certain receivables/ advances/ other assets/ current liabilities/ payables have been written off/written back of Rs. 624.61 cr (Net) during the year of which Rs. 503.85 Crs pertains to closure of a branch in the US transferred to reserves. Of this, Rs. 548.43 cr relates to the six months period ended 30th September 2015 and the balance as found during the detailed audit as non recoverable, relating to the period under the erstwhile management and reported in the accounts as on that date. In view of the large sums that were written off/written back by the erstwhile management, the Administrator of the Company has initiated steps to obtain information from the erstwhile Chairman and the erstwhile Managing Director for necessary action.
g) It is learnt that the company is in dialogue with all the lenders to work out a reschedulement plan seeking waiver of interest and other charges together with reduced principal amounts as may become feasible for servicing by the company when it is rebuilt under settlement.
h) With respect to other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 in our opinion and to 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 2016 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 2016.
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.14,07,45,894 and this sum has still not been deposited in any scheduled bank as mentioned in the notes to accounts.
iv) Statutory dues of TDS, PF, ESI, Professional Tax, VAT, Service Tax amounts to Rs. 18.81 crs and remain unpaid.
v) In addition, the company has a contingent liability of Rs. 272.52 crs relating to Income Tax, VAT, Service Tax and Sales Tax.
OTHER MATTERS
We did not audit the financial statements of the branch in USA which constitute total assets of Rs. 38.66 crs as at 31st March 2016, total revenue of Rs.107.09 crs, net loss of Rs.4.48 crs for the year ended. These financial statements and other financial information have not been audited by us and we relied upon the financial statements furnished to us and our opinion on the combined financial statements to the extent is based on the Financial Statements given to us for the overseas branch.
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 2016.
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.
ANNEXURE TO THE INDEPENDENT AUDITORâS REPORT
Referred to in paragraph I under the heading of âreport on other Legal and Regulatory requirementsâ of our report of even dated to the Members of Zylog Systems Limited on statements as of and for the year ended 31st March 2016
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 material 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, Employeesâ State Insurance, TDS, Sales Tax, Service Tax, and other statutory dues with the appropriate authorities.
b) According to the information and explanations given to us, undisputed amounts payable of Rs. 18.88 crs in respect of the aforesaid dues were outstanding as at March 31, 2016. 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 2016 on account of disputes are given below.
Disputed statutory dues unpaid as on 31st Mar 2016 |
|||
Statute |
Forum where the dues of rupees dispute is pending |
Period to which amount relates |
Amount |
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) |
AY2008-09 |
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 |
The Income Tax Act, 1961 |
CIT (Appeals) |
AY 2011-12 |
98,74,36,680 |
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 Finance Act 1994 |
Commissioner of Service Tax |
2009-10 & 2013-14 to 2014-15, 2015-16 (till Sept-15) |
7,45,32,462 |
d) There are no Amounts transferred to investor Education and Protection Fund in accordance with the provisions of the Act and rules made there under.
8. The Company has accumulated losses and at the end of the financial year 31st March 2016 it is Rs 883.92 crs.
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 Private Financiers and the list is given here under.
Rs. in lakhs
Name of banks/financial institutions/private financiers |
Amount |
Syndicate Bank - PCFC / Corporate Loan |
16,835.00 |
State Bank of Mauritius - PC Loan |
5,648.88 |
State Bank of India |
543.43 |
Union Bank of India - ECB / PCFC / Term Loan |
32,097.92 |
ICICI Bank - ECB / PCFC Loan |
6,026.79 |
Indian Overseas Bank |
2,026.11 |
Dena Bank |
9,742.06 |
Federal Bank Limited |
2,495.32 |
Name of banks/financial institutions/private financiers |
Amount |
SIDBI (Unsecured Loan) |
337.06 |
IFIN Securities Finance Ltd |
500.00 |
JM Financials Ltd |
130.00 |
Prabhudas Leeladhar |
608.45 |
Reliance Capital Limited |
1,100.00 |
Hire Purchase (HPFS / IBM) |
3,060.00 |
SREI Equipment Finance Pvt Ltd |
999.00 |
L & T Finance Ltd |
3,000.00 |
Private Financiers |
4,821.06 |
Total |
89,971.08 |
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 except in the case of Dena Bank, a case has been filed by Central Bureau of Investigation for perpetrating Acts punishable under Indian Criminal Code. The loan amount involved in this case is Rs. 97.42 crs.
-s/d
T. R. Sarathy
Place: Chennai Chartered Accountant
Date: 30-Jun-2016 Membership No. 025982
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 æwhether 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