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INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF CALIFORNIA SOFTWARE COMPANY LIMITED_
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of California Software Company Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, 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 Standalone 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 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 of 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.
Our responsibility is to express an opinion on these standalone 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. 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.
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, of the state of affairs of the Company as at 31st March, 2015, and its profit/loss and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to the following matters in the Notes to the financial statements:
1. Note 26 and 27 in the stand alone financial statements which indicate that the Standalone Company has accumulated losses and its net worth has been fully eroded, the Standalone Company has incurred a net loss during the current and previous year(s) and, the Stand alone Company's current liabilities exceeded its current assets as at the balance sheet date. These conditions, along with other matters set forth in Note 26, indicate the existence of a material uncertainty that may cast significant doubt about the Stand alone Company's ability to continue as a going concern.
2. Note No. 29 to the standalone financial statements and Notes to Fixed Asset schedule regarding Change in Depreciation Policy of Fixed Assets and resultant loss amounting to Rs.58,64,486/– including prior period Depreciation of Rs. 50,21,028.00
3. Note No. 30 to the stand alone financial statement regarding write back of Account Payables to Aspire Communications P Ltd and Aspire Peripherals P Ltd, two wholly owned subsidiaries of the Standalone Company amounting to Rs. 253,45,879.00
4. Note no. 31 to the standalone financial statement regarding unsecured loans from Associate companies amounting to Rs. 246,936,135.00
5. Company's Overseas subsidiary CSWL Inc and Indian subsidiary Aspire Communications P Ltd and it subsidiary Aspire peripherals P Ltd have stopped their operations fully. CSWL Inc has initiated Liquidation proceedings.
Our opinion is not modified in respect of these matters.
Report On Other Legal and Regulatory Requirements
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) Matter described under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.
(f) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.
(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A".
(h) With respect to the 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 to the best of our information and according to the explanations given to us:
i. The Company does not have any pending litigations which would impact its financial position.
ii. The Company did not have any long–term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There is delay in transferring the amounts, required to be transferred, to the Investor Education and Protection Fund by the Holding Company incorporated in India, an amount of Rs. 51,163.00 was due for payment payable on 29–08–2014 was effected only on 04–05–2015.
ANNEXURE TO AUDITORS' REPORT
(Referred to in paragraph 3 of our Report of even date to the members of California Software Company Limited on the financial statements for the year ended March 31, 2015)
i. (a). The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets;
(b). it has been represented to us, fixed assets have been physically verified by the management at regular intervals; as informed to us no material discrepancies were noticed on such verification; however documentation of the same comparing the physical inventory and the book inventory is not made available to us.
ii. The nature of business of the Company does not require it to have any inventory. Hence, the requirement of clause (ii) of paragraph 3 of the said Order is not applicable to the Company.
iii. The Company has not granted any loans to group or associate companies during the year and there are no outstanding from previous years and hence Clauses (a), (b) and (c) are not applicable.
iv. In our opinion and according to the information and explanations given to us, there is 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 the sale of services. Further, on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, no major weakness has not been noticed or reported.
v. The Company has not accepted any deposits from the public covered under Section 73 to 76 of the Companies Act, 2013.
vi. As informed to us, the Central Government has not prescribed maintenance of cost records under sub–section (1) of Section 148 of the Act.
vii. (a) According to the information and explanations given to us and based on the records of the company examined by us, the company is regular in depositing the undisputed statutory dues, including Income–tax, Sales–tax, Service Tax, Excise Duty and other material statutory dues, as applicable, with the appropriate authorities in India;
(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not been deposited on account of any dispute other than those mentioned in Note 46; and
(c) An amount of Rs.51163/– was due for payment to Investor Education and Protection Fund on 29/08/2014. There has been a delay in paying this and the payment was effected on 04/05/2015.
viii. The Company has accumulated losses amounting to Rs. 109,06,00,637/– as at March 31, 2015 Accumulated loss is more than the networth of the company. Company has incurred cash losses during the year ended on that date and in the immediately preceding two financial years.
ix. According to the records of the Company examined by us and the information and explanation given to us, the Company has defaulted in repayment of its dues to Canara Bank Term Loan and as at the balance sheet date total dues amounted to Rs. 346,80,209/–.
x. In our opinion, and according to the information and explanations given to us, the Company has not given any guarantee for loan taken by others from a bank or financial institution during the year
xi. In our opinion, and according to the information and explanations given to us, the company has not raised any term loans during the 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 we been informed of any such instance by the Management
For and on behalf of
Tomy & Francis
Chartered Accountants FRN: 010922S
CA K J Tomy BSc FCA
Membership No: 022768
29th May 2015