Maars Software International Ltd Auditor Reports

MAARS SOFTWARE INTERNATIONAL LIMITED ANNUAL REPORT 2010-2011 AUDITORS REPORT To, The Member of MAARS Software International Limited, We have examined the attached Consolidated Balance Sheet of Maars Software International Limited and its subsidiaries Maars Infratech Pvt. Ltd (India),and Maars Software International Ltd FZLLC (Dubai) as at March 31, 2011, the Consolidated Profit and Loss Account for the year then ended and Consolidated Cash Flow Statement thereon. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in India. These Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework and are free of material misstatements. As audit includes, examining on test basis, evidence supporting amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements. We believe that our audit provides a reasonable basis for our opinion. We did not audit the financial statement of the subsidiary. This has been audited by other auditors, whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of the subsidiary, is based solely on the other auditors report. We report that the Consolidated Financial Statements have been prepared by the Companys Management in accordance with requirements o f Accounting Standards (A.S) 21, Consolidated Financial Statements issued by the Institute of Chartered Accountants of India. In our opinion and to the best of our information and according to the explanations given to us, the Consolidated Financial Statements give a true and fair in conformity with the accounting principles generally accepted in India. a) In the case of the Consolidated Balance Sheet, of the state of affairs of the Company and its subsidiary as at 31.03.2011. b) In the case of the Consolidated Profit and Loss Account of the Loss of the Company and its Subsidiary as at 31.03.2011. c) In the case of the Cash Flow Statement of the Cash Flows of the Company and its Subsidiaries. For Daiya, Tiwari & Soni FRN:-004268C (CA Pawan Sharma) Partner Date : 8th September, 2011 Place: Chennai M.No.- 075861 ANNEXURE TO THE AUDITORS REPORT: Annexure referred to in paragraph 3 of the Auditors Report of even date on the accounts of MAARS Software International Limited for the year ended on 31st March, 2011] 1. (a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) As informed to us, the management in accordance with a phased program of verification adopted by the company has physically verified a major portion of these assets. In our opinion the frequency of verification is reasonable. (c) As per information and explanations provided by the management during the year, the company has not disposed off a substantial portion of fixed assets. 2. The company is in the business of software development and training and does not carry any inventories. 3. According to the information and explanations given to us during the year company has not taken loans from and has not granted loans to the parties covered U/s. 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii) of the said order not applicable to the company. 4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of fixed assets and with regard to the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls. 5. According to the information and explanations provided by the management, there have been transactions that need to be entered in the register required to be maintained U/s. 301 of the Companies Act, 1956. 6. The company has not taken/accepted any deposits from the public to which the directives issued by the RBI and the provision of section 58A, 58AA and any other relevant provisions of the companies act 1956and the rule framed there under are applicable accordingly, the provision of paragraph 4(vi) of the said order not applicable to the company.. 7. In our opinion, the company has an internal control system commensurate with the size and nature of its business. 8. As informed to us, that maintenance of cost records has not been prescribed by the Central Govt. U/s. 209(l)(d) of the Companies act, 1956, is not applicable to the company. (a) According to the records of the company, generally the company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, Employees state insurance, income-tax, sales-tax, wealth-tax, custom duty, excise-duty, cess and other statutory dues applicable to it. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, wealth-tax, sales tax, customs duty and excise duty were outstanding, as at 31.03.2011, for a period of more than six months from the dated they became payable. (c) According to the records of the company, there are no dues of sales tax, income tax, custom tax/wealth tax, excise duty/cess, which has not been deposited on account of any dispute except the income tax for the assessment year 2001-2002 amounting to Rs.84,83,898/- for which an appeal was preferred before the honorable Income Tax Tribunal. Apart from the above, for the assessment year 2005-2006 amounting to Rs.32,93,993/- is disputed to be paid on account of appeal preferred before the honorable CIT (Appeals), Chennai respectively against the assessment order passed by the A.O. 10. The accumulated losses of the company are not more than fifty percent of its net worth. The company has not incurred any cash losses during the financial year covered by our audit and the immediate preceding financial year. 11. Based on our Audit procedure and on the information and explanation given by the management, the company has not provided for payment of interest on the dues payable to banks and financial institutions. As informed to us the company is in process of one time settlement with the said banks and financial institutions. 12. The company has not granted any loans or advances on basis of the security by way of pledge of shares, securities, debentures and other securities. 13. In our opinion company is not a chit fund or a nidhi/mutual benefit fund/society. Accordingly the provision of paragraph of 4(xiii)of the said order are not applicable to the company. 14. The company is not dealing in or trading in shares, security, debenture, and other investments. Accordingly, the provision of the paragraph of 4 (xiv) of the said order are not applicable to the company. 15. The company has given guarantee to Bank of India for loan taken by the erstwhile UK Subsidiary. The said guarantee was materialized. As explained to us, amount due thereon has been included as a part of one time settlement proposal submitted by the company. The amount involved in that guarantee is 1 million pounds (Approx.). 16. The company has not taken any term loan during the year under review. 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 the no funds raised on short-terms basis have been used for long-term investment. No long-term funds have been used to finance short-term assets except core (permanent) working capital. 18. Based on our examination of records and the information provided to us by the management, we report that the company has made a preferential allotment of 77,20,000 Equity shares of Rs 10/ Each against 8% Cumumaltive convertible Preference shares allotted to Bank of India as a part of one settlement for conversion of outstanding loan are still not accepted by Bank of India. Except the above the company has not made any preferential allotment of shares to parties and companies covered under section 301 of the Act. 19. During the period covered by our audit report, the company has not issued any debentures. 20. The company has not raised funds from public issue during the year. 21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit. For Daiya, Tiwari & Soni FRN:-004268C (CA Pawan Sharma) Partner Date : 8th September, 2011 Place: Chennai M.No.- 075861