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 fl ow Statement for the year then ended and a summary of the
significant accounting policies and other explanatory information.
MANAGEMENTS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Companys 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 fl ows 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 companys 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 Companys 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 (Auditors 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 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 Auditors 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 fl ow statement of the cash fl ows of the company for the year ended on that date.
|
-s/d- |
|
T. R. Sarathy |
| Place: Chennai |
Chartered Accountant |
| Date: 30-Jun-2016 |
Membership No. 025982 |
ANNEXURE TO THE INDEPENDENT AUDITORS REPORT
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 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, Employees 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 |
+91-9892691696
