The Members of Four Soft Limited
1. We have audited the attached Balance Sheet of Four Soft Limited, (theCompany) as at 31 March 2011, and also the Profit and Loss Account and CashFlow Statement for the year ended on that date annexed thereto (collectively referred asthe financial statements). These financial statements are the responsibilityof the Companys management. Our responsibility is to express an opinion on thesefinancial s tatements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally acceptedin India. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 (theOrder) (as amended), issued by the Central Government of India in terms ofsub-section (4A) of Section 227 of the Companies Act, 1956 (the Act), weenclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of theOrder.
4. Without qualifying our opinion, we draw attention to Note 12 in Schedule 18 to thefinancial statements. During the year ended 31 March 2011, for the Financial Year2005-2006, the Assessing Officer had raised a demand of income tax (including interestthereon) amounting to Rs. 26,454,812 by adopting the adjustment ordered by the TransferPricing Officer under Section 92CA of the Income Tax, 1961. Based on independent advicereceived by the Company, the Management believes that the international transactions withassociate enterprises for the Financial Year 2005-2006 and subsequent financial years areat arms length and there would be no tax liability on the Company. Consequently,these financial statements do not include any adjustments that may arise out of theoutcome of this uncertainty.
5. Further to our comments in the Annexure referred to above, we report that:
a. We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the p urposes of our audit;
b. In our opinion, proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;
c. The financial statements dealt with by this report are in agreement with the booksof account;
d. On the basis of written representations received from the directors, as on 31 March2011, and taken on record by the Board of Directors, we report that none of the directorsare disqualified as on 31 March 2011 from being appointed as a director in terms of clause(g) of subsection (1) of Section 274 of the Act;
e. In our opinion and to the best of our information and according to the explanationsgiven to us, the financial statements dealt with by this report comply with the accountingstandards referred to in sub-section (3C) of Section 211 of the Act and the Rules framedthere under and give the information required by the Act, in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India, in the case of:
i) the Balance Sheet, of the state of affairs of the Company as at 31 March 2011;
ii) the Profit and Loss Account, of the loss for the year ended on that date; and
iii) the Cash Flow Statement, of the cash flows for the year ended on that date.
ForWalker, Chandiok & Co
Firm Registration No: 001076N
per Sanjay Kumar
Membership No: 207660
Date: 27 May 2011
Annexure to the auditors report of even date to the members of Four Soft Limited,on the financial statements as at and for the year ended 31 March 2011.
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit, we report that:
(i) (a) The Company has maintained proper records showing full particulars, includingquantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. In ouropinion, this periodicity of physical verification is reasonable having regard to the sizeof the Company and the nature of its assets. No material discrepancies were noticed onsuch verification.
(c) In our opinion, a substantial part of fixed assets have not been disposed offduring the year.
(ii) (a) The Company does not have any inventory. Accordingly, the provisions of clause4(ii) of the Order are not applicable.
(iii) (a) The Company has granted unsecured loan to two body corporates covered in theregister maintained under Section 301 of the Companies Act, 1956. The maximum amountoutstanding during the year and the yearend balance of loan granted to the parties was Rs.156,357,274.
(b) In our opinion, the rate of interest and other terms and conditions of such loansare not, prima facie, prejudicial to the interest of the Company.
(c) In respect of loans granted, repayment of the principal amounts is as stipulatedand payment of interest has been regular.
(d) There is no amount overdue in respect of loans granted to companies, firms or otherparties listed in the register maintained under Section 301 of the Act.
(e) The Company has not taken any loans, secured or unsecured from companies, firms orother parties covered in the register maintained under Section 301 of the Act.Accordingly, the provisions of clauses 4(iii)(f) and 4(iii)(g) of the Order are notapplicable to the Company.
(iv) (a) Owing to the nature of its business, the Company does not maintain anyphysical inventories. Accordingly, clause 4(iv) of the Order with respect to purchase ofinventories is not applicable to the Company. In our opinion, there is an adequateinternal control system commensurate with the size of the Company and the nature of itsbusiness for the purchase of fixed assets and for the sale of goods and services. Duringthe course of our audit, no major weakness has been noticed in the aforesaid internalcontrol system.
(v) (a) In our opinion, the particulars of all contracts or arrangements that need tobe entered into the register maintained under Section 301 of the Act have been so entered.
(b) Owing to the unique and specialized nature of the items involved and in the absenceof any comparable prices, we are unable to comment as to whether the transactions made inpursuance of such contracts or arrangements have been made at prevailing market prices atthe relevant time.
(vi) The Company has not accepted any deposits from the public within the meaning ofSections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975.Accordingly, the provisions of clause 4(vi) of the Order are not applicable to theCompany.
(vii) In our opinion, the Company has an internal audit system commensurate with itssize and the nature of its business.
(viii) To the best of our knowledge and belief, the Central Government has notprescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209of the Act, in respect of the services rendered by the Company. Accordingly, theprovisions of clause 4(viii) of the Order are not applicable.
(ix) (a) Undisputed statutory dues including provident fund, investor education andprotection fund, employees state insurance, income-tax, sales-tax, wealth-tax,service-tax, custom duty, excise duty, cess and other material statutory dues, asapplicable, have generally been regularly deposited with the appropriate authorities,though there has been a slight delay in a few cases. No undisputed amounts payable inrespect thereof were outstanding at the year-end for a period of more than six months fromthe date they became payable.
(b) The dues outstanding in respect of sales-tax, income-tax, custom duty, wealth-tax,excise duty, cess on account of any dispute, are as follows:
|Nature of the statute ||Nature of dues ||Amount (Rs.) ||Period to which the amount relates ||Forum where dispute is pending |
|The Income Tax Act, 1961 ||Transfer pricing adjustment ||26,454,812 ||Financial year 2005-06 ||Income Tax appellate tribunal |
|The Finance Act, 1994 ||Service tax ||3,563,314 ||Financial year 2006-07 ||Appellate tribunal |
(x) In our opinion, the Company has no accumulated losses at the end of the financialyear and it has not incurred any cash losses during immediately previous financial year,where as it has incurred cash losses in the current year.
(xi) In our opinion, the Company has not defaulted in repayment of dues to a bankduring the year. The company has no dues payable to a financial institution or debentureholder.
(xii) The Company has not granted any loans and advances on the basis of security byway of pledge of shares, debentures and other securities and accordingly, the provisionsof clause 4(xii) of the Order are not applicable to the Company.
(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable.
(xiv) In our opinion, the Company is not dealing in or trading in shares, securities,debentures and other investments. Accordingly, the provisions of clause 4(xiv) of theOrder are not applicable to the Company
(xv) According to the information and explanations given to us, the Company has givenguarantees for loans taken by its wholly owned overseas subsidiary from a nationalizedbank in India, and the terms and conditions whereof in our opinion are not prima faciepre-judicial to the interest of the Company.
(xvi) The Company did not have any terms loans outstanding during the year.Accordingly, the provisions of clause 4(xvi) of the Order are not applicable.
(xvii) In our opinion, no funds raised on short-term basis have been used for long-terminvestment.
(xviii) The Company has not made any preferential allotment of shares to parties orcompanies covered in the register maintained under Section 301 of the Act. Accordingly,the provisions of clause 4(xviii) of the Order are not applicable the Company.
(xix) The Company has neither issued nor had any outstanding debentures during theyear. Accordingly, the provisions of clause 4(xix) of the Order are not applicable to theCompany.
(xx) The Company has not raised any money by public issues during the year.Accordingly, the provisions of clause 4(xx) of the Order are not applicable to theCompany.
(xxi) No fraud on or by the Company has been noticed or reported during the periodcovered by our audit.
For Walker, Chandiok & Co
Firm Registration No: 001076N
per Sanjay Kumar
Membership No: 207660
Date: 27 May 2011