(STANDALONE FINANCIAL STATEMENTS)
To the Members of
OMNITECH INFOSOLUTIONS LIMITED
Omnitech House A/13 Cross Road No 5
Kondivita Road Marol M.I.D.C. Andheri (East)
Report on Financial Statements
We have audited the accompanying financial statements of Omnitech Infosolutions Ltdwhich comprise the Balance Sheet as at March 31 2014 and the Statement of Profit andLoss and Cash Flow Statement for the year then ended and a summary of significantaccounting policies and other explanatory information.
Management's Responsibility for the financial statements
Management is responsible for the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the Accounting Standards referred to in sub-section (3C) ofsection 211 of the Companies Act 1956 ("the Act"). This responsibility includesthe design implementation and maintenance of internal control relevant to the preparationand presentation of the financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal control relevant to the Company's preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by management aswell as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
Basis of Opinion
1. As stated in the note to financial statement for Retirement Benefits The Company'sliability for gratuity is to be determined by actuarial valuation made at the end of eachfinancial year using the projected unit credit method. The actuarial valuation report fromthe LIC is not available hence the adhoc provision of 50% of the liability of the previousfinancial year is made which is not as per accounting standard ( AS-15) issued by theInstitute of chartered Accountant of India
2. Due to financial irregularity defaults in repayments winding up petitions arefiled against the company by three unsecured Loan Party (ICD) and which are pending foradmission & for further hearing. Further there are 2 arbitration petitions filed bytwo NBFC's against the company which are pending for hearing. The Company is in activediscussions with these parties for restructuring of these loans/ICD. The Management is ofthe view that since matters relating to several of the financial irregularities are subjudice and various proceedings are ongoing any further adjustments / disclosures tothe financial statements if required would be made in the financial statements of theCompany as and when the outcome of the above uncertainties is known and the consequentialadjustments / disclosures are identified
In view of the above we are unable to comment on the adjustments / disclosures whichmay become necessary as a result of further findings of the ongoing legal proceedings andthe consequential impact if any on these financial statements.
Emphasis of Matters:
Without qualifying our opinion we draw our attention to the following matters:
a. Balances of Debtors Creditors Loans and advances given are subject toconfirmation.
b. The company has made the provision for doubtful debts of Rs. 3306.05 against thetrade receivable which are outstanding more than 365 days.
c. The inventories carried by the company include software which are in the form ofCDs. We have not verified the technical details of such CDs.
d. Company also have intangible assets having gross block value of Rs.19739.41 lacs outof which assets worth Rs. 1736. 57 Lacs have been acquired during the year from itssubsidiary Europe Omnitech Technology services BV Netherland. This assets has beenacquired under tri party agreement between the company its subsidiary and the Vendor. M/SEurope Omnitech Technology services BV has made payment of 19.00 lacs Euro to the vendorcompany in the year 2012. Now Europe Omnitech Technology services BV has transferred thesaid intangible assets to the company at the value which it has paid to the vendor plusinterest of 1.99 lacs Euro. We have not verified the technical aspects of the intangibleassets.
e. The company have not been able to recover Rs 318.45 Lacs from the staff who haveleft the company. The same have been written off in the books during the year.
f. As stated in Note 3 "Long Term Borrowings" and Note 6 "Short TermBorrowings" of the Financial Statements wherein the Company's loan liabilities hasbeen reinstated in the Financial Statements based on the bank statements pursuant to theCorporate Debt Restructuring Scheme ("CDR"). However as per the information andexplanation provided to us the Company is yet to Comply with the terms and conditions ofthe scheme of CDR The company has been sanctioned Term Loans from GE Capital Services andthe outstanding balance as on 31st March 2014 is Rs.3146.47 lacs. The companyhas not been able to repay the stipulated instalments and hence the GE Capital Serviceswho has gone for arbitration and has called back the credit facility hence the same hasbeen classified under Short term borrowings.
g. The Company has not been able to perform few contracts with some parties for whichit has to pay damages of Rs.13.48 Lacs. Apart from this one customer has invoked BankGuarantee of Rs. 77.20 lacs for non performance of Contract. The management informed usthat they are perusing with the customers and are hopeful to get the money back from thecustomer.
h. As informed by the management the company has invested Rs. 14.06 lacs in itssubsidiary in USA which is functioning at lower level of operation and its investmentvalue has been eroded and Similarly company had invested Rs.45.41 lacs in one of itssubsidiaries in Singapore and as informed by the management the operation is not startedand hence the company has provided for the diminution in the value of investment inaccordance with the accounting standard 13 issued by the ICAI
In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements give the information required by the Act in themanner so required subject to the our comments in paragraph 1 & 2 in basis of opinionand in paragraph a to h in Emphasis of Matters above give a true and fair view inconformity with the accounting principles generally accepted in India:
a) in the case of the Balance Sheet of the state of affairs of the Company as at March312014;
b) in the case of the statement of Profit and Loss of the loss for the year ended onthat date; and
c) in the case of the Cash Flow Statement of the cash flows for the year ended on thatdate.
Report on other legal and regulatory requirements
1. As required by the Companies (Auditor's Report) Order 2003 ("the Order")issued by the Central Government of India in terms of sub-section (4A) of section 227 ofthe Act we give in the Annexure a statement on the matters specified in paragraphs 4 and5 of the Order.
2. As required by section 227(3) of the Act we report that:
a) we have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose 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 Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account.
d) in our opinion the Balance Sheet Statement of Profit and Loss and Cash FlowStatement comply with the Accounting Standards referred to in subsection (3C) of section211 of the Companies Act 1956;
e) on the basis of written representations received from the directors as on March 312014 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2014 from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Companies Act 1956.
f) Since the Central Government has not issued any notification as to the rate at whichthe cess is to be paid under section 441A of the Companies Act 1956 nor has it issued anyRules under the said section prescribing the manner in which such cess is to be paid nocess is due and payable by the Company.
| ||For POLADIA & CO. |
| ||Chartered Accountants |
| ||FRN No.: 128274W |
| ||Navin Gala |
|Place: Mumbai ||(Partner) |
|Date: 28th May 2014 ||Membership No.: 040640 |