To the Members of
PALSOFT INFOSYSTEMS LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of PALSOFT INFOSYSTEMS LIMITED("the company") which comprise the Balance Sheet as at March 31 2016 and theProfit and Loss Statement and Cash Flow Statement for the year then ended and a summaryof significant accounting policies and other explanatory information.
Management Responsibility for the Financial Statements
The Company's Board of Directors are responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2016 and its loss and its cash flows for the year ended on that date.
Emphasis of Matters
We draw attention to the following matters: -
a. The company has incurred employee cost of Rs. 1956327 during current year(previous year Rs. 1838934) for the development of software however management is notexpecting future economic benefit against such cost. The same has been written off duringthe year. (Refer Note No. vii)
b. The Financial Statements which indicate that the Company has accumulated losses ofRs.46320120 and its net worth has been fully / substantially eroded the Company hasincurred a net loss Rs.6611200 and net cash loss Rs.3423384 during the current yearand the company's current liabilities exceeds Rs. 16404641 by its current assets as atthe date of Balance Sheet. These conditions indicate the existence of a materialuncertainty that may cast significant doubt about the company's ability to continue as agoing concern. However the financial statements of the company have been prepared on goingconcern basis.
c. The Company does not have a system of obtaining external confirmation from variousparties including loans and advances given Trade receivables and liabilities howeverfull loss provisions have been made against such doubtful loans advances and Tradereceivables.
Our Opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order2016 ("the Order")issued by the Central Government of India in terms of sub section (11) of section 143 ofthe Act we give in the Annexure A a statements on the matters specified inparagraphs 3 and 4 of the order to the extent applicable.
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 bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of accounts as required by Law have been kept by theCompany so far as it appears from our examination of those books;
(c) The Balance Sheet Profit and Loss Statement and Cash Flow Statement dealt with bythis Report are in agreement with the books of account;
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;
(e) On the basis of the written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in terms of Section164 (2) of the Act; and
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls we invitereference to our separate Report in Annexure-"B" attached hereto andforming part of this report.
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
a) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements. However no details are made available to usregarding reasons fornon-payment of sales tax/VAT demand of Rs. 25.62 lacs (Refer note no.2.3 to the financial statement) and sales tax demand paid under dispute of Rs. 5 lac(Refer Note 2.10).
b) The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
c) There are no amounts which are required to be transferred to the InvestorEducation and Protection Fund by the Company.
For KALANI & COMPANY
Place of Signature:
Jaipur Date: 28/05/ 2016
ANNEXURE A' TO THE INDEPENDENT AUDITORS REPORT
Annexure referred to in our Independent Auditors Report to the members of the PALSOFTINFOSYSTEMS LIMITED on the financial statements for the year ended 31st March 2016.
(i) (a) The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner by the management during the yearwhich in our opinion is reasonable having regard to the size of the company and nature ofits assets. No material discrepancies were noticed on such physical verification.
(c) The Company does not held any immovable property Thus paragraph 3(i)(c) of theorder is not applicable.
(ii) There was no inventory at the year- end. Thus paragraph 3(ii) of the Order is notapplicable.
(iii) The Company has not granted any loans secured or unsecured to any companiesfirms limited liability partnership or other parties covered in register maintained underSection 189 of the Companies Act 2013.
In view of the above the clauses 3 (iii)(a) 3 (iii)(b) and 3 (iii)(c) of the Orderare not applicable.
(iv) The Company has not granted any loans or given any guarantee and security coveredunder Section 185 and 186 of the Companies Act 2013. Thus the clause 3(iv) of the orderis not applicable.
(v) The company has not accepted deposits from the public within the meaning ofSections 73 to 76 of the Companies Act 2013 and the rules made there under. Thus clause
(v) of the order is not applicable.
(vi) Having regard to the nature of the Company's operation clause (vi) of order isnot applicable relating to maintenance of cost records.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employee's stateinsurance income tax sales tax wealth tax service tax duty of customs duty ofexcise value added tax cess and any other statutory dues have been regularly depositedduring the year by the Company with the appropriate authorities except in case of SalesTax and Surcharge on Sales Tax amounting to Rs. 2562228/-.
(b) According to the information and explanations available to us regarding reason fornon-payment of such dues there are no dues of income tax or sales tax or wealth tax orservice tax or duty of custom or duty of excise or value added tax or cess which have notbeen deposited on account of any dispute. However the company has paid Rs. 5 Lacs anddisclosed it as Sales Tax demand under dispute (Refer Note No. 2.10). No further detailsare made available to us and accordingly we are not able to assess the quantum of anyunpaid disputed dues in this regard.
(viii) The company has not taken any loans or borrowing from a financial institutionbank Government or dues to debenture holders. Thus paragraph 3 (viii) of the order is notapplicable.
(ix) The Company has not raised any money by way of initial public offer or furtherpublic offer. Thus clause 3(ix) of the order is not applicable to the company.
(x) According to the information and explanations given to us and as represented by theManagement and based on our examination of the books and records of the Company and inaccordance with generally accepted auditing practices in India we have been informed thatno case of frauds has been committed by the Company or on the company by its officers oremployees during the year.
(xi) The company has not paid any managerial remuneration accordingly this clause isnot applicable.
(xii) The provisions of clause 3 (xii) of the Order for Nidhi Company are notapplicable to the Company.
(xiii) The Company has complied with the provisions of Section 177 and 188 of theCompanies Act 2013 w.r.t. transactions with the related parties wherever applicable.Details of the transactions with the related parties have been disclosed in the financialstatements as required by the applicable accounting standards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.Accordingly provisions of clause 3 (xiv) of the Order are not applicable to the Company.
(xv) The Company has not entered into any non-cash transactions with the directors orpersons connected with him as covered under Section 192 of the Companies Act 2013.
(xvi) According to information and explanation given to us the Company is not requiredto be registered u/s 45-IA of Reserve Bank of India Act 1934. Accordingly provision ofclause 3(xvi) of the Order is not applicable to the Company.
For KALANI & COMPANY
Place of Signature: Jaipur
Date: 28/05/ 2016
Annexure: "B" to the Independent Auditor's Report of the Even Date on thefinancial statements of Palsoft Infosystems Limited on the accounts for the year ended31st March 2016 Report on the Internal Financial Controls under Clause (i) of Sub-section3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of PalsoftInfosystems Limited ("the Company") as of March 31 2016 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on "the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India"(ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofinternal financial controls and both issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2016 based on"the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the ICAI".
Place of Signature: Jaipur
Date: 28/05/ 2016
For KALANI & COMPANY