Management's Responsibility for the financial statements.
The Company's Board of Directors are responsible for the matters stated in Section 134(5)of the Companies Act, 2013 with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors' responsibility
Our responsibility is to express an opinion on these standalone fi financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend
on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over fi financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
Basis for Qualified Opinion:
1. The company is undergoing a problem in facing the going concern issue, here we mention events that may cast doubt about going concern assumption as follows (as per para 10 of SA 570"Going Concern").
a. As referred in Note 7(a) to the Financial statements ,company is facing difficulties in paying statutory dues such as Service tax and TDS amount of Rs.3,34,42,351 and Rs.3,72,09,345 on 31.03.2015out of which Rs.1,72,27,765 and Rs.3,30,82,033 outstanding for more than one year.
b. Note 2(c) in the financial statements which indicates that the Company has accumulated losses and its net worth has been substantially eroded, the company incurred a net loss during the current year ( Rs.178.33 crores ) and previous year (Rs.74.12 crores ) and, the Company's current liabilities (Rs.119.64 crores ) exceed its current assets (Rs.10.25 crores) as at the balance sheet date. These conditions, indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis.
2. Out of the Unsecured advances given to staff & ex- employees referred in Note 10(d) of the financial statements, there is uncertainty about recovery of Rs. 22,78,206/- as there is no recovery during the year and these are outstanding for more than a year.
3. During the year the company has written off Rs. 139.87crores as Bad debts referred in Note 11 of the financial statements of the company which are outstanding for more than a year and the management is not confident of realisation from its customers.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations given to us,except for the effects of the matters described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2015, and its loss and its cash flows for the year ended on that date.
Other Matters:
We did not audit the financial statements/information of Acropetal USA branch included in the standalone financial statements of the Company whose financial statements / financial information reflect total assets of Rs. 1,92,312 as at 31st March, 2015 and there is no revenue for the year ended on that date, as considered in the standalone fi financial statements. The financial statements / information of this branch has been incorporated as Unaudited.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.
2. As required by Section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books
(c) the balance sheet, the statement of Profit and loss and the cash flow statement dealt with by this Report are in agreement with the books of account;
(d) in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
(e) The going concern matter described in sub- paragraph (a) under the Emphasis of Matters paragraph above may have an adverse effect on the functioning of the Company.
(f) We have neither been given written representation from the directors nor secretarial audit report for the year that none of them are disqualified as on 31.03.2015 from being appointed as directors in terms of Sec 164(2).Form DD-B pursuant to sec 274(1)(g) has been filed on 27.10.2013, due to failure in payment of dividend since 27.10.2012. However the company is of opinion that Sec 164(2) does not had to "ipsofacto" vacation and it envisages vacation only at the end of the present tenure.
Annexure to the Independent Auditors' Report
The Annexure referred to in our Independent Auditors' Report to the members of the Company on the standalone financial statements for the year ended 31 March 2015, we report that:
i) (a) The Company has maintained proper records showing full particulars of quantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified by the management during the year and no material discrepancies noticed on such verifi cation.
ii) The Company is a service company, primarily rendering software services. During the year, it does not hold any inventories. Thus, paragraph 3(ii) of the Order is not applicable.
iii) The Company has granted interest free loans to two body corporates covered in the register maintained under section 189 of the Companies Act, 2013 ('the Act'). The outstanding balances for the granted loans are as follows:
Persons covered in the Register Amount outstanding as on maintained under Sec 189 31.03.2015 (in Rs)
Binary spectrum softech Pvt Ltd 4,76,94,775
Ecologix knowledge solutions pvt ltd 4,50,000
a) According to the information and explanations given to us, the company has not received any money in the year with respect to above loans.
b) According to the information and explanations given to us the company has taken reasonable steps to recover the principal amount. But they are not able to recover any amount
iv) 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 with regard to purchase of fixed assets and sale of services. The activities of the Company do not involve purchase of inventory and the sale of goods. We have not observed any major weakness in the internal control system during the course of the audit.
v) The company has not accepted deposits from the public. However There are balances outstanding in Advance from customers for a period more than 365 days from the date of acceptance, which will be classified as deposits as per sec 2(31) read with Rule 2(c)(xii) of the Companies act, 2013.There are advances from MD for Rs. 2,70,35,837/- for which we were not provided certificate from him that it is not advanced out of borrowed money and hence we are unable to report that whether it is deposit u/s 2(31) or otherwise.
vi) The Central government has not prescribed the maintenance of cost records under section 148(1) of the companies Act,2013 for any of the services rendered by the company.
vii) (a) Undisputed statutory dues including provident fund, employees 'state insurance, income- tax, sales tax, wealth tax, service tax, duty of custom, duty of excise,value added tax,cess and any other statutory dues have not been regularly deposited with the appropriate authorities and there have been serious delays in large no of cases.
Statement of Arrears of Statutory dues Outstanding for more than six months
Amount Amount Amount paid outstanding Amount outstanding Nature of the (including as on payable For on adjustments 31/03/2014 the year 31/03/2015 during the year (Rs) (Rs) Provident Fund 2,26,51,497 1,94,35,719 3,03,69,954 1,17,17,262
CST 4,12,500 - - 4,12,500
DDT 1,56,34,793 - - 1,56,34,793
Employees state 8,10,532 12,06,591 7,14,128 13,02,995 Insurance
TDS 3,62,55,921 76,24,308 67,52,534 3,71,27,694
Period to Forum
Name of the Nature of which the where the Amount in Rs. statue the dues amount dispute is relates pending
Regular CIT
Income tax April 2010- Act, 1961 assessment 10,44,80,750 March Appeals- Tax I,Bangalore
Regular CIT Income tax April 2011- assessment 17,31,71,810 Appeals- Act, 1961 March 2012 Tax I,Bangalore
viii) The company has accumulated losses at the end of the financial year 2014-15.The accumulated losses are more than Fifty percent of its net worth as at the balance sheet date. The company has also incurred cash losses in the financial year and the immediately preceding fi financial year.
ix) The company has defaulted in repayment of dues to financial institutions and banks
Amount Period to which Bank/financial outstanding institution Opening Bal. on the amount relates 31/03/2015
April 2014 - Union bank of India 17,56,58,842 19,96,32,045 March 2015
April 2014 - South Indian bank 13,26,93,893 15,08,03,416 March 2015
April 2014 - Bank of India-TL 3,46,40,034 3,72,69,007 March 2015
April 2014 - Axis Bank-CC 10,13,71,806 11,58,65,171 March 2015
Central Bank of April 2014 - India-TL 10,12,08,054 12,00,21,011 March 2015
April 2014 - SBT-Packmg credit 25,80,03,017 29,39,73,703 March 2015
April 2014 - lOB-Cash credit 65,64,744 74,60,675 March 2015
SBI Global factors Nil 9,92,18,413 April 2014 - Ltd March 2015
April 2014 - Indo factoring Nil 2,13,08,525 March 2015
xi) The company has not taken any term loans during the financial year.
xii) During the course of our examination of the books and records of the company, carried in accordance with the auditing standards generally accepted in India, we have neither come across any instance of fraud on or by the company noticed or reported during the course of our audit nor have been informed of any such instance by the management.
For K Gopalakrishnan& Co
Chartered Accountants
Firm's registration number: 009600S
K Gopalakrishnan
Proprietor
Membership number: 025421
Bangalore
29 May 2015