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 31 March 2017 theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
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 but not for the purpose of expressing anopinion on whether the company has in place an adequate internal financial controls systemover financial reporting and the operating the effectiveness of such controls. An auditalso includes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating 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 on the standalone 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 2017 and its profit and its cash flows for the year ended on that date.
Emphasis of Matters
We draw attention to the following matter in the Notes to the financial statements:
a. The company has incurred employee cost of Rs.2079897 during current year (previousyear Rs. 1956327) for the development of software however management is not expectingfuture economic benefit against such cost. The same has been written off during the year.Refer Note no. vii to Note no. 2.17- Other disclosures and Notes to the Balance Sheet.
b. The Financial Statements indicate that the Company has accumulated losses ofRs.45726034 and its net worth has been fully/ substantially eroded the Company hasearned a profit of Rs. 594087 and cumulative net cash loss of Rs. 3353013 has beencarried forward and the Company's current liabilities exceed by Rs.12229116.24 over itscurrent assets as at the date of Balance Sheet. These conditions indicate the existence ofa material uncertainty that may cast significant doubt about the company's ability tocontinue as a going concern. However the financial statements of the company have beenprepared on going concern basis.
c. The Company has pending statutory liability of sales tax demand of Rs. 2562228persisting for a long time.
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) Order 2016 ("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 statement on the matters specified in paragraphs 3and 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 the Statement of Profit and Loss and the Cash Flow Statementdealt with by this 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 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B"; and
(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 for non-payment of sales tax/VAT demand of Rs. 25.62 lacs (Refer Noteno. 2.4 to Balance Sheet) and sales tax demand paid under dispute for Rs. 5 lacs (Refernote no. 2.11 to Balance Sheet).
b) The Company did not have any longterm 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.
d) The company has provided requisite disclosures in its financial statements as toholding as well as dealings in Specified Bank Notes during the period from 8 November 2016to 30 December 2016 and these are in accordance with the books of accounts maintained bythe company. Please refer to Note 2.17 (vii) to the financial statements.
| ||FOR H.S. DARDA & CO. |
| ||CHARTERED ACCOUNTANTS |
|Place: Jaipur ||FRN: 000889C |
|Date: May 27 2017 ||Sd/- |
| ||RAJNEESH SINGHVI |
| ||PARTNER |
| ||M. No. 073506 |
ANNEXURE-A TO 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 31stMarch 2017.
(i) (a) The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of fixed assets. The management hasdetermined that all the assets have been impaired due to obsolescence and wear and tear.
(b) The company has a regular system of physical verification of its fixed assets.However the assets have been identified to be impaired during the year and accordinglyaccounted for in the books of accounts so the physical verification of such assets isnot required.
(c) The company does not have 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 unsecurec to any companiesfirms limitec liability partnership or other parties covered in register maintained underSection 189 or the Companies Act 2013 during the current year.
Therefore the provisions or clause 3(iii)(a) 3(iii)(b) and 3(iii)(c) of the Companies(Auditor's Report) Order 2016 are not applicable.
(iv) In our opinion and according to the information and explanations given to us tirecompany has not granted any loans or given any guarantee and security covered undersection 185 and 186 of the Companies Act 2013. Thus the clause 3(iv) of the Order is notapplicable.
(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 given to us regarding reason fornonpayment 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 to Note no. 2.11). No furtherdetails are made available to us and accordingly we are not able to assess the quantum ofany unpaid disputed dues in this regard.
(viii) In our opinion and according to the information and explanations given to usthe company has not taken any loans or borrowings from a financial institution bankGovernment 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 during the year. Thus clause 3(ix) of the order is not applicable to thecompany.
(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 fraud has been committed by the Company or on the Company by its officers andemployees 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) According to the information and explanation given to us and based onexamination of our records of the Company the Company has complied with the provisions ofSection 177 and 188 of the Companies 2013 with respect to the transactions with therelated parties wherever applicable. Details of the transactions with the related partieshave been disclosed in the financial statements as required by the applicable accountingstandards.
(xiv) Tire 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) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly provision of clause 3(xvi) of the Order is notapplicable to the Company.
| ||FOR H.S. DARDA & CO. |
| ||CHARTERED ACCOUNTANTS |
| ||FRN:000889C |
|Place: Jaipur ||Sd/- |
|Date: May 27 2017 || |
| ||RAJNEESH SINGHVI |
| ||PARTNER |
| ||M.No. 073506 |
Annexure - B to the Auditors' Report on the Internal Financial Controls under Clause(i) of Sub-section 3 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 31 March 2017 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.
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'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired 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 1CA1 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 Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively 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 judgment 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 th- possibiiity of collusion or improper managemer override ofcontrols material misstatements due t error or fraud may occur and not be detected. Aiscprojections of any evaluation of the internal financia controls over financial reportingto future periods ar: subject to the risk that the internal financial conti cover financial reporting may become inadequate because of changes in conditions or thatthe degree e compliance with the policies or procedures rna deteriorate.
In our opinion the Company has in all materia respects an adequate internalfinancial control: system over financial reporting and such interna financial controlsover financial reporting were operating effectively as at 31 March 2017 based on theinternal control over financial reporting criteric established by the Company consideringthe essentia components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||FOR H.S. DARDA& CO. |
| ||CHARTERED ACCOUNTANTS |
| ||FRN:000889C |
|Place: Jaipur ||Sd/- |
|Date: May 27 2017 ||RAJNEESH SINGHVI |
| ||M. No. 073506 |