ORG INFORMATICS LIMITED
ANNUAL REPORT 2010-2011
The Members of
ORG Informatics Limited
1. We have audited the attached Balance Sheet of ORG Informatics Limited
(the Company) as at March 31, 2011, the Profit and Loss Account and also
the Cash Flow Statement for the year ended on that date annexed thereto.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally
accepted in India. Those Standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the 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 statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
3. As required by the Companies (Auditors' Report) Order, 2003 (as amended)
issued by the Central Government of India in terms of sub-section (4A) of
section 227 of the Companies Act, 1956, we enclose in the Annexure, a
statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. The financial statements have been prepared on going concern basis,
despite significant losses suffered during the year, substantial contingent
liabilities not provided for (Refer Note Nos. 1(a), (b), (c), (d)), legal
cases filed by some of the suppliers against the Company and its officials
under section 138 of the Negotiable Instruments Act, 1881 (Refer Note No.
2(a)), restriction imposed on a major customer by court, on vendor's
request, from making any payment to the Company (Refer Note No 2(c)),
causing severe cash crunch, which had in turn resulted in defaults in
payment of statutory liabilities / non compliance of statutory
requirements/ loss of key management personnel / staff and considerable
scaling down of operations. The Company's ability to continue as a going
concern is dependent upon satisfactory resolution of the above matters
besides steps being taken by management to provide / arrange for
significant additional funds.
5. Attention is invited to the following:
i. We are unable to opine on the adequacy of provision of TRs. 161,700 for
permanent fall in the value of investments amounting to TRs 695,202 in
absence of convincing evidence;
ii. We are unable to opine on the realisability of non moving stock of
Stores and Spares of TRs 50,286 not provided by the management for reasons
stated in Note No. 7.
iii. We are unable to opine on recoverability/realisability of old out
standing of Sundry Debtors aggregating to TRs 2,337,024 (including TRs
4,968 due from Subsidiary) which may not be recoverable and which are not
appropriately evidenced with correspondence statement of accounts,
unconfirmed, unreconciled and against which no material recoveries have
been made till date of completion of audit. No provision has been made for
such receivables as the management considers them as good for recovery.
iv. We are unable to opine on the bank balance for which Bank Balance
confirmations are not available to the tune of TRs 9,565.
v. We are unable to opine on recoverability/realisability of old out
standing in respect of (a) advances of TRs. 20,319 given to other company
(b) TRs 28,080 advance given to Vendors and (c) TRs 6,593 receivable in
respect of Tender Deposit given which are not appropriately evidenced with
correspondence statement of accounts, unconfirmed, unreconciled and against
which no material recoveries have been made till date of completion of
audit. No provision has been made for such receivables as the management
considers them as good for recovery.
vi. In the absence of detailed workings, convincing evidence and legal
consultants' opinion on the availability of TRs 28,455 in respect of CENVAT
credit for set off in the future, we are unable to comment on the
appropriateness of carry forward of the CENVAT recoverable.
vii. In respect of guarantee of TRs 25,000 invoked by MPSEDC during the
year, the management has claimed that the amount is good of recovery since
the matter was sub judice and now the company is being Judgment creditor,
the management's claim remains to be substantiated by the Order passed by
the Court of appropriate jurisdiction. The Company has made the claim of
said amount with the MPSEDC for wrongful invocation of the guarantee. We
are unable to opine on the recoverability or otherwise of the amount shown
under Loans and Advances.
viii. We are unable to opine on collectability of dues in respect of
revenue booked in respect of MTNL contract from BEL to the tune of
TRs.132,069 which are dependent on achievement of certain milestones.
ix. In respect of Managerial Remuneration paid during the year to Managing
and Whole time Director of TRs. 7,696, (Previous year TRs. 6,015),
Shareholders' approval was taken in Annual General Meeting held on 29-12-
2009 and 30.9.2010. However, No approval from Central Government is
obtained for reason stated in Note No 20.
x. No Provision has been made for :
a. Impairment loss of Fixed Assets for reasons stated in Note No. 10.
b. Loans and advances of TRs. 625,403 due from Subsidiary Companies and
Associate Company for the reasons stated in Note No. 9 (b).
c. Invocation of bank guarantees given in respect of various projects under
taken by the Company to the extent of TRs 251,708 and consequential
penalties subsequent to the close of the year.
d. Interest and commission of TRs 64,145, payable, in terms of agreements,
to the vendors (shown as contingent liability).
e. Bank and Other Charges of TRs 19,470 paid to one of the vendor (shown as
f. Implementation, service / warranty charges aggregating to TRs 30,582
(shown as contingent liability).
g. Liquidated Damages / penalty payable to customers for delays in
performance / non compliance of some of the contractual Terms and
conditions aggregating to TRs 448,736 (shown as contingent liability).
h. Interest and Penal charges on bank loans aggregating to TRs. 102,840 for
the reasons stated in Note No. 6 (shown as Contingent liability)
i. Penalty and other charges which may be imposed by (a) the various
Statuary /Regulatory Authorities on account of non compliance of the
provisions of the various statutes including non payment of statutory dues
and filing of periodic returns. (b) the Court, with respect to the cases
filed by the parties against Company's officials (including some past
officials) under sections 138 and 143 of the Negotiable Instruments Act,
1881, on account of dishonor of post dated cheques issued to them.
Due to uncertainty involved, the impact of the above on the profit for the
year is presently unascertainable.
Further to our comments in the Annexure referred to in paragraph 3 and
subject to our comments in paragraphs and 5 above, we report that:
(i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
(ii) In our opinion, proper books of account, as required by law have been
kept by the Company so far as appears from our examination of those books;
(iii) The balance sheet, profit and loss account and cash flow statement
dealt with by this report are in agreement with the books of account;
(iv) In our opinion, the balance sheet, profit and loss account and cash
flow statement dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of Section 211 of the Companies
Act, 1956, except to the extent referred to hereunder:
a. The Company has not determined the provision required for slow moving /
non moving inventory for the purpose of arriving at the Value to be scaled
down in terms of Accounting Standard 2 - Inventories;
b. The Company has not appropriately determined and provided for fall in
value of long term investments in subsidiary / associate companies, in
terms of Accounting Standard - 13 -Investments; and
c. The Company has not adequately determined impairment in assets during
the year, in terms of Accounting Standard - 28 - Impairment of Assets.
(v) On the basis of written representations received from directors as on
March 31, 2011 and taken on record by the Board of Directors, we report
that none of the directors is disqualified as on March 31, 2011 from being
appointed as a director in terms of clause (g) of sub-section (1) of
Section 274 of the Companies Act, 1956;
(vi) In our opinion and to the best of our information and according to the
explanations given to us, the said accounts read together with accounting
policies and notes thereon give the information required by the Companies
Act, 1956, in the manner so required;
7. Subject to our remarks mentioned in paras 4 and 5 above, the impact on
the financial results for the year is unascertainable and our comments
contained in annexure referred to in Paragraph 3 above, in our opinion and
to the best of our information and according to the explanations given to
us, the said accounts read together with the notes thereon give the
information required by the Companies Act, 1956, 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 of the
Company as at March 31, 2011;
(b) In the case of the profit and loss account, of the profit for the year
ended on that date; and (c) in the case of the cash flow statement, of the
cash flows for the year ended on that date.
For Sorab S. Engineer & Co.
Firm Registration No. 110417W
CA. Chokshi Shreyas B.
Membership No.: 100892
October 5, 2011.
ANNEXURE TO AUDITOR'S REPORT
(Referred to in paragraph 3 of our report of even date)
Re: ORG Informatics Limited:
1. In respect of its fixed assets:
a) The Company has generally maintained proper records showing full
particulars, including quantitative details and situation of fixed assets.
b) Fixed assets held by the Company was not subjected to physical
verification. In the absence of verification and reconciliation we are
unable to state whether there are any discrepancies.
c) Though the Company has disposed off considerable portion of its fixed
assets, from areas wherein it had stopped operation due to closure of
office, as cost saving measure during the year, its ability to continue as
a going concern, we are informed by the management, is not affected by such
2. In respect of its inventories:
a) As explained to us, during the year none of the inventories comprising
of Projects in progress, stores and spares, trade goods etc. have been
subjected to physical verification at any time during the year by the
b) In the absence of physical verification indicated herein above, there
is no question of adequacy or otherwise of the procedures.
c) In our opinion and according to the information and explanations given
to us, the Company is maintaining proper records of its inventories.
However during the year since the inventories owned by the Company had not
been physically verified by the management, we are unable to state whether
or not there are any discrepancies.
3. In respect of loans, secured or unsecured, granted by the Company to
companies, firms or other parties covered in the register maintained under
section 301 of the Companies Act, 1956, according to the information and
explanations given to us:
a) The Company had granted interest bearing loan to a subsidiary by
converting the share application money into loan vide agreement dated 30th
Oct. 2008 and interest free loans to other subsidiaries besides amounts
advanced to one company covered in the register maintained under Section
301 of the Companies Act, 1956. As at the year-end, the outstanding balance
of such loan granted to this company is TRs. 11,295 and the maximum amount
involved during the year was TRs. 12,436.
b) In our opinion and according to the information and explanations given
to us, the terms and conditions of the interest free loans referred to
above, keeping in view significant interest claimed by suppliers for
credits provided, bankers and other parties, appear prima facie prejudicial
to the interest of the Company.
c) The loans granted are repayable on demand. As informed, the Company has
not demanded repayment of the loans during the year and thus there is no
default on the part of the parties to whom the amount is lent.
d) The Company has, in the earlier years, taken interest bearing (and
interest free) loan from a Party covered in the register maintained under
Section 301 of the Companies Act,1956 and the outstanding balance of such
loan aggregated to TRs 33,567 (including accrued interest) and the maximum
amount involved during the year was TRs 33,656.
e) The rate of interest and other terms and conditions of such loan is, in
our opinion, prima facie not prejudicial to the interest of the Company.
f) The loan is repayable on demand and the same has not been demanded.
4. In our opinion and according to the information and explanations given
to us and our evaluation of the prevailing internal control structure and
its operation disclosed weakness in internal control systems. The said
control structure in operation can not be stated to be commensurate with
the size of the Company and the nature of its business with regard to the
purchase of traded goods / inventory, fixed assets and with regard to the
sale of goods and rendering of services.
5. In respect of contracts or arrangements entered in the register
maintained in pursuance of section 301 of the Companies Act 1956, to the
best of our knowledge and belief and according to the information and
explanations given to us:
a) The particulars of contracts or arrangements referred to Section 301
have been entered in the register required to be maintained under the said
b) According to the information and explanations given to us, where each of
such transactions, other than interest bearing and interest free loans
granted (Referred to in Para 3(b), (c) and (d) above), is in excess of Rs.
5 Lakhs in respect of any party, the transactions have been made at prices
which are prima facie, reasonable having regard to the prevailing market
prices at the relevant time, except that in respect of sale of services, no
comparison of prices could be made since similar services are not being
rendered to any other party by the Company.
6. In our opinion and according to the information and explanations given
to us, the Company has not accepted any deposits from public within the
meaning of Section 58A and 58AA or any other relevant provisions of the
Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975
with regard to the deposits accepted from the public.
7. There is no Internal Audit System in the Company during the year under
review and hence we are unable to comment on this aspect.
8. As informed to us, the Central Government has not prescribed maintenance
of cost records under clause (d) of sub-section (1) of Section 209 of the
Companies Act, 1956.
9. According to the information and explanations given to us and as
revealed by the books of accounts maintained by the Company, except for the
following statutory dues, the Company has been generally regular in
depositing undisputed statutory dues, including Provident Fund, Employees
State Insurance, Income tax, Sales Tax, Service Tax and other statutory
dues with the appropriate authorities during the year:
Balance at Period
Amount (TRs.) which due
Contribution to PF 2,403 July `10
Staff Professional Tax 209 Oct `10
Contribution to ESI 145 July `10
Maharashtra CST 254 Aug `10
Delhi CST 107 Oct `10
Karnataka VAT 45 Mar `10
UP Sales Tax 19 Dec' 08
Service Tax 16,650 Apr' 08
Education Cess Payable 902 Apr' 08
Secondary Higher Education Cess 409 Apr' 08
During the year, the management has confirmed that there were no dues
payable in respect of Investor Education and Protection Fund, Wealth Tax,
Custom Duty, Excise Duty, Cess and other material statutory dues.
In the case of Cess, the central government has till date not prescribed
the amount of Cess payable under section 441A of the Companies Act, 1956.
The details of disputed demands which have not been deposited during the
year as under:
Nature of Nature of Amount Period to Forum where
Statue the dues (TRs.) which the dispute is
Income Tax Penalty 9,555 2002-03 ITAT
Act, 1961 9,866 2003-04 CIT(Appeal)
1,874 2004-05 CIT(Appeal)
Income Tax 1,0942 2004-05 CIT(Appeal)
21,083 2005-06 CIT(Appeal)
15,396 2006-07 CIT(Appeal)
15,996 2007-08 CIT(Appeal)
Sales Sales Tax 37,057 2008-09 Appellate
Tax Act Tribunal
In respect of Income Tax demands, the Company has deposited TRs 20,000 on
10. In our opinion and according to information and explanations given to
us, the accumulated losses of the Company at the end of the financial year
are more than fifty percent of its net worth and the Company has not
incurred cash losses in current financial year but the Company had incurred
cash losses in the immediately preceding financial year.
11. In our opinion and according to the information and explanations given
to us, the Company has defaulted in repayment of dues to the banks. The
period and the amount of defaults excluding interest and penal charges are
Description Period of Amount TRs.
of Loan default involved
BOI-Cash Credit Account is NPA 29,222
Since March 2008
BOI-BG Invoked October 2008 7,800
PNB-Cash Credit Account is NPA 113,372
Since June 2010
PNB-BG Invoked Account is NPA 58,000
Since June 2010
CB-Cash Credit Account is NPA 91,386
Since Feb 2010
CB-WCTL Account is NPA 8,549
Since Feb 2010
CB-BG Invoked Account is NPA 5,243
Since Feb 2010
SCB-Cash Credit Account is NPA 81,862
Since March 2010
Barclay-WCL January 2009 95,863
BOB-CC/WCTL/ Account is NPA 141,053
BG Invoked Since Feb 2010
12. According to the information and explanations given to us and based on
the documents and records produced before us, the Company has not granted
loans and advances on the basis of security by way of pledge of shares,
debentures and other securities.
13. In our opinion, the Company is not a chit fund or a nidhi mutual
14. According to the information and explanations given to us, the Company
is not dealing in shares, securities and other investments.
15. In our opinion and according to the information and explanations given
to us, the Company has, other than guarantees given to a bank on behalf of
subsidiary Company, not given any guarantees for loans taken by others from
banks and financial institutions. The terms and conditions whereof are not
prejudicial to the interest of the Company except for the guarantees which
are invoked by the banks.
16. To the best of our knowledge and belief and according to the
information and explanations given to us, no term loans, except vehicle
loans which are repayable in installments, and their application is as
agreed were availed by the Company during the financial year, hence there
is no question of any misapplication.
17. According to the information and explanations given to us, funds raised
by the Company on short term basis have, prima facie, not been used during
the year for long term investment.
18. According to the information and explanation given to us and as
evidenced by the books and records, the Company has not issued any bonds /
debentures during the year and hence there is no question of creating any
security during the year.
19. The Company has not, according to the information and explanation given
to us, raised any funds from public during the year hence the question of
verification of end use does not arise.
20. According to the information and explanations given to us, the Company
has not made during the year, any preferential allotment of shares to
parties and companies covered in the Register maintained under Section 301
of the Companies Act, 1956.
21. During the course of our examination of the books and records of the
Company, carried out in accordance with the generally accepted auditing
practices in India, and according to the information and explanations given
to us, we have neither come across any instance of fraud on or by the
Company, noticed or reported during the year, nor have we been informed of
such case by the management.
For Sorab S. Engineer & Co.
Firm Registration No. 110417W
CA. Chokshi Shreyas B.
Membership No. 100892
Place : Vadodara
Date : October 5, 2011