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Zylog Systems Ltd.

BSE: 532883 Sector: IT
NSE: ZYLOG ISIN Code: INE225I01026
BSE 00:00 | 15 Jul Zylog Systems Ltd
NSE 05:30 | 01 Jan Zylog Systems Ltd
OPEN 0.67
PREVIOUS CLOSE 0.67
VOLUME 320
52-Week high 0.67
52-Week low 0.00
P/E 2.91
Mkt Cap.(Rs cr) 4
Buy Price 0.76
Buy Qty 100.00
Sell Price 0.70
Sell Qty 1000.00
OPEN 0.67
CLOSE 0.67
VOLUME 320
52-Week high 0.67
52-Week low 0.00
P/E 2.91
Mkt Cap.(Rs cr) 4
Buy Price 0.76
Buy Qty 100.00
Sell Price 0.70
Sell Qty 1000.00

Zylog Systems Ltd. (ZYLOG) - Auditors Report

Company auditors report

To the Members of Zylog Systems Limited

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Zylog Systems Limited(the Company) which comprise the Balance sheet as at 31st March 2016 the Statement ofProfit and Loss and the Cash fl ow Statement for the year then ended and a summary of thesignificant 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 preparation ofthese standalone financial statements to give a true and fair view of the financialposition financial performance and cash fl ows of the company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules2014 and Accounting standard 30financial instruments: Recognition and Measurement issuedby the Institute of Chartered Accountants of India to the extent it does not contradictany other Accounting standard referred to in section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014. This responsibility includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theAssets of the company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design and implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuing theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provision of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions 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 and authoritative pronouncements issued by the Institute ofChartered Accountants of India. Those standards and pronouncements require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from material misstatement. An auditinvolves performing procedures to obtain audit evidence about the amounts and thedisclosures in the financial statements. The procedures selected depend on the auditors'judgment 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 financial control relevant to the company's preparation and fairpresentation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion whether the company has in place an adequate internal financialcontrol system over financial supporting and the operative effectiveness of such controls.An audit also includes evaluating the appropriateness of the accounting policies used andthe reasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the standalone financial statements.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1.As required by the Companies (Auditor's Report ) Order2015 (" the order")Issued by the Central government of India in terms of Sub Section(11) of section 143 ofthe Act and on the basis of such checks of the books and records of the company as weconsidered appropriate and according to the information and explanations given to us wegive in the Annexure a statement on the matters specified in paragraphs 3 and 4 of Order2.As required by Section 143(3) of the Act we report that: a) We have sought and obtainedall the information and explanations which to the best of our knowledge and belief werenecessary for the purposes of our audit b) In our opinion proper books of account asrequired by law have been kept by the Company so far as it appears from our examination ofthose books c) The Balance Sheet the Statement of Profit and Loss and the Cash FlowStatement dealt with by this Report are in agreement with the books of account d) In ouropinion the aforesaid standalone financial statements comply with the AccountingStandards notified in section 133 of the Companies Act 2013 read with Rule 7 of theCompanies (Accounts) Rules 2014. And Accounting Standard 30 financial Instruments:Recognition and Measurement issued by the Institute of Chartered Accountants of India tothe extent that does not contradict any other accounting standard referred to in sec 133of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 except in respect ofnon provision of gratuity and interest relating to all borrowings. e) On the basis ofwritten representations received from the directors as at 31st March 2016 and taken onrecord by the Board of Directors none of the Directors are disqualified as at 31st March2016 from being appointed as a director in terms of Section 164 (2) of the Act. f) Certainreceivables/ advances/ other assets/ current liabilities/ payables have been writtenoff/written back of Rs. 624.61 cr (Net) during the year of which Rs. 503.85 Crs pertainsto closure of a branch in the US transferred to reserves. Of this Rs. 548.43 cr relatesto the six months period ended 30th September 2015 and the balance as found during thedetailed audit as non recoverable relating to the period under the erstwhile managementand reported in the accounts as on that date. In view of the large sums that were writtenoff/written back by the erstwhile management the Administrator of the Company hasinitiated steps to obtain information from the erstwhile Chairman and the erstwhileManaging Director for necessary action. g) It is learnt that the company is in dialoguewith all the lenders to work out a reschedulement plan seeking waiver of interest andother charges together with reduced principal amounts as may become feasible for servicingby the company when it is rebuilt under settlement. h) With respect to other matters to beincluded in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 in our opinion and to the best of our knowledge and belief andaccording to the information and explanation given to us i) The company has disclosed theimpact of pending litigations as at 31st March 2016 on its financial position in itsstandalone financial statement. ii) The company has not transferred any amounts requiredto be transferred to the Investor Education and Protection Fund by the company during theyear ended 31st March 2016. iii) The company has not complied sec 205 A of the CompaniesAct 1956 in respect of unpaid dividend for the financial year 2011-12 of Rs.140745894and this sum has still not been deposited in any scheduled bank as mentioned in the notesto accounts. iv) Statutory dues of TDS PF ESI Professional Tax VAT Service Taxamounts to Rs. 18.81 crs and remain unpaid. v) In addition the company has a contingentliability of Rs. 272.52 crs relating to Income Tax VAT Service Tax and Sales Tax.

OTHER MATTERS

We did not audit the financial statements of the branch in USA which constitute totalassets of Rs. 38.66 crs as at 31st March 2016 total revenue of Rs.107.09 crs net loss ofRs.4.48 crs for the year ended. These financial statements and other financial informationhave not been audited by us and we relied upon the financial statements furnished to usand our opinion on the combined financial statements to the extent is based on theFinancial Statements given to us for the overseas branch.

OPINION

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India. a) in the Case of the Balance Sheet ofthe State of affairs as at 31st March 2016. b) in the case of the Statement of Profit andLoss of the Loss of the company for the year ended on that date and c) in the case of theCash fl ow statement of the cash fl ows of the company for the year ended on that date.

-s/d-
T. R. Sarathy
Place: Chennai Chartered Accountant
Date: 30-Jun-2016 Membership No. 025982

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in paragraph I under the heading of ‘report on other Legal andRegulatory requirements' of our report of even dated to the Members of Zylog SystemsLimited on statements as of and for the year ended 31st March 2016

1. In respect of its fixed assets a) The company has maintained proper records showingfull particulars including quantitative details and situation of fixed assets on the basisof available information. b) As explained to us all the fixed assets have been physicallyverified by the management in a phased periodical manner which in our opinion isreasonable having regard to the size of the Company and nature of its assets. No materialdiscrepancies were noticed on such physical verification. c) In our opinion the companyhas not disposed off a substantial part of the fixed assets during the year and the goingconcern status of the company is not affected.

2. The company is a software development company and hence this clause is notapplicable to this company.

3. According to the information and explanations given to us the company has notgranted any loans secured or unsecured to companies firms or other parties covered in theregister maintained under section 189 of the Companies Act 2013. Accordingly theprovisions of Clause 3(iii) (a) and (b) of the order are not applicable to the company andhence not commented upon.

4. In our opinion and according to the information and explanations given to us thereis an adequate internal control system commensurate with the size of the company and thenature of its business for the purchase of fixed assets and for sale of services. Duringthe course of our audit we have not observed any major weakness in such internal controlsystem.

5. According to the information and explanations given to us the Company has notaccepted any deposit from the public. Therefore the provisions of Clause (v) of the Orderare not applicable to the Company and hence not commented upon.

6. According to the information and explanations given to us the Central Governmenthas not prescribed cost records for the products manufactured by this company and hencethe provisions of clause (vi) of the order are not applicable to the Company and hence notcommented upon.

7. In respect of statutory dues: a) According to the records of the Company thecompany generally not depositing undisputed statutory dues including Provident FundInvestor Education and protection Funds Employees' State Insurance TDS Sales TaxService Tax and other statutory dues with the appropriate authorities. b) According tothe information and explanations given to us undisputed amounts payable of Rs. 18.88 crsin respect of the aforesaid dues were outstanding as at March 31 2016. Further thecompany also not depositing tax deducted at source regularly with the appropriateauthorities. c) Details of Income tax Sales tax and service tax which have not been paid/ deposited as on 31st March 2016 on account of disputes are given below.

Disputed statutory dues unpaid as on 31st Mar 2016

Statute Forum where the dues of rupees dispute is pending Period to which amount relates Amount
The Income Tax Act 1961 CIT (Appeals) AY 2001-02 3149091
The Income Tax Act 1961 CIT (Appeals) AY 2004-05 5424063
The Income Tax Act 1961 CIT (Appeals) AY 2005-06 9911812
The Income Tax Act 1961 CIT (Appeals) AY 2006-07 16076919
The Income Tax Act 1961 CIT (Appeals) AY 2007-08 247178861
The Income Tax Act 1961 CIT (Appeals) AY 2007-08 10512138
The Income Tax Act1961 CIT (Appeals) AY2008-09 573354450
The Income Tax Act 1961 Appellate Tribunal AY 2009-10 359504941
The Income Tax Act 1961 CIT (Appeals) AY 2010-11 433602221
The Income Tax Act 1961 CIT (Appeals) AY 2011-12 987436680
TN General Sales Tax Act Commercial Taxes Dept. 2004-05 1934000
Karnataka Commercial Tax Act High Court Karnataka 2009-10 2542074
Service Tax under the Finance Act 1994 Commissioner of Service Tax 2009-10 & 2013-14 to 2014-15 2015-16 (till Sept-15) 74532462

d) There are no Amounts transferred to investor Education and Protection Fund inaccordance with the provisions of the Act and rules made there under.

8. The Company has accumulated losses and at the end of the financial year 31st March2016 it is Rs 883.92 crs.

9.Based on our audit procedures and according to the information and explanations givento us we are of the opinion that the Company has defaulted in repayment of dues tofinancial institutions banks and Private Financiers and the list is given here under.

Rs in lakhs

Name of banks/financial institutions/private financiers Amount
Syndicate Bank – PCFC / Corporate Loan 16835.00
State Bank of Mauritius – PC Loan 5648.88
State Bank of India 543.43
Union Bank of India – ECB / PCFC / Term Loan 32097.92
ICICI Bank – ECB / PCFC Loan 6026.79
Indian Overseas Bank 2026.11
Dena Bank 9742.06
Federal Bank Limited 2495.32
Name of banks/financial institutions/private financiers Amount
SIDBI (Unsecured Loan) 337.06
IFIN Securities Finance Ltd 500.00
JM Financials Ltd 130.00
Prabhudas Leeladhar 608.45
Reliance Capital Limited 1100.00
Hire Purchase (HPFS / IBM) 3060.00
SREI Equipment Finance Pvt Ltd 999.00
L & T Finance Ltd 3000.00
Private Financiers 4821.06
Total 89971.08

10. According to the information and explanations given to us the Company has notgiven guarantees for loans taken by others from banks and financial institutions. 11. TheCompany has not raised any term loan during the year. Hence the clause (xi) is notapplicable to this company and hence not commented upon.

12. According to the information and explanations given to us no material fraud on orby the Company has been noticed or reported during the year except in the case of DenaBank a case has been filed by Central Bureau of Investigation for perpetrating Actspunishable under Indian Criminal Code. The loan amount involved in this case is Rs. 97.42crs.

-s/d-
T. R. Sarathy
Place: Chennai Chartered Accountant
Date: 30-Jun-2016 Membership No. 025982

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