California Software

We have audited the attached Balance Sheet of California Software
 Company Limited as at March 31,2009 and the related Profit and Loss
 Account and Cash Flow Statement for the year ended on that date, which
 we have signed under reference to this report. 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.
 
 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
 
 As required by the Companies (Auditors Report) Order, 2003 as amended
 by The Companies (Auditor’s Report) (Amendment) Order, 2004 issued by
 the Government of India in terms of section 227(4A) of ‘The Companies
 Act, 1956’ of India (the ‘Act’) and on the basis of such checks of the
 books and records of the Company as we considered appropriate and
 according to the information and explanations given to us, we give in
 the Annexure a statement on the matters specified in paragraphs 4 and 5
 of the said Order.
 
 Attention is invited to the following:
 
 No provision for diminution in the value of investments in subsidiaries
 , amounting to Rs. 803,687,985 has been considered to restate the
 carrying value of investments with reference to fair value , as in the
 opinion of the management these are held as long term investments , as
 stated in Note 7 of Schedule 22
 
 Further to our comments in the Annexure referred to in paragraph 3
 above, we report that:
 
 (a) Subject to our remarks in paragraphs 4 above, we have obtained all
 the information and explanations, which to the best of our knowledge
 and belief were necessary for the purposes of our audit;
 
 (b) Proper books of account as required by law have been kept by the
 Company so far as appears from our examination of those books;
 
 (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 (d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report have been prepared in all
 material respects in compliance with the applicable accounting
 standards referred to in section 211(3C) of the Act
 
 (e) On the basis of written representations received from the Directors
 and taken on record by the Board of Directors, none of the directors is
 disqualified as on March 31, 2009 from being appointed as a director in
 terms of Section 274(1)(g) of the Act.
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto, give in the prescribed
 manner the information required by the Act and subject to our remarks
 in paragraphs 4 above with consequential effects on the Company’s loss
 for the year and relevant items on the Balance Sheet which are not
 readily ascertainable, also 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, 2009
 
 b) In the case of the Profit and Loss Account, of the loss 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.
 
 
 ANNEXURE TO THE AUDITORS’ REPORT
 
 (Referred to in paragraph 3 of our Report of even date to the members
 of California Software Company Limited on the financial statements for
 the year ended March 31,2009)
 
 The Annexure referred to in the Auditors Report to the members of
 California Software Company Limited (the Company) for the year ended
 March 31,2009. We report that:
 
 (i) (a) The Company is in the process of maintaining proper records to
 show full particulars including quantitative details and situation of
 fixed assets.
 
 (b) It has been represented to us that the fixed assets of the Company
 are physically verified by the management during the year; however
 documentation of the same comparing the physical inventory and the book
 inventory is not made available to us.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 of by the Company during the year.
 
 (ii) (a) The Company has granted an unsecured loan to a company covered
 under register maintained under Section 301 of the Act. The maximum
 
 amount involved during the year and the year end balance of the loan
 was Rs 7,000,000.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of such loan are not prima facie prejudicial to the interest of the
 Company
 
 (c) In respect of the aforesaid loan, reasonable steps have been taken
 by the Company for the recovery of the principal amount and interest,
 where applicable.
 
 (d) The Company has not taken any loans, secured or unsecured, from
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 (iii) In our opinion and according to the information and explanations
 given to us, having regard to the explanation that certain items
 purchased/
 
 services rendered are of special nature for which suitable alternative
 sources do not exists for obtaining comparative quotations, there is
 generally an adequate internal control systems commensurate with the
 size of the Company and the nature of its business for the purchase of
 fixed assets and for the sale of goods and services. Further, on the
 basis of our examination of the books and records of the Company, and
 according to the information and explanations given to us, we have
 neither come across nor have been informed of any continuing failure to
 correct major weaknesses in the aforesaid internal control system.
 
 (iv) (a) In our opinion and according to the information and
 explanation given to us, the particulars of contracts or arrangements
 referred to in Section 301 of the Act have been entered in the register
 required to be maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, having regards to our comments in paragraph 3 above,
 
 the transactions made in pursuance of such contracts or arrangements
 entered into the register maintained in pursuance of Section 301 of the
 Act and exceeding the value of Rupees five lakhs in respect of any
 party during the year, have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 (v) In our opinion and according to the information and explanations
 given to us, the Company has in general, complied with the provisions
 of
 
 Sections 58A and 58AA of the Act and the rules framed there under, with
 regard to the deposits accepted from public. According to the
 information and explanations given by the Company, no order under
 aforesaid sections has been passed by the Company Law Board on the
 Company in respect of the aforesaid deposits
 
 (vi) In our opinion, the internal audit coverage needs to be improved
 to make the system commensurate with its size and nature of its
 business of the
 
 Company.
 
 (vii) The Government of India has not prescribed maintenance of cost
 records by the Company under Section 209(1)(d) of the Act for any of
 the
 
 products of the Company.
 
 (viii) (a) According to the information and explanations given to us
 and the records of the Company examined by us, in our opinion, the
 Company has generally been regular in depositing the undisputed
 statutory dues including Provident Fund, Investor Education and
 Protection Fund, Employees’ State Insurance, Income-Tax, Sales tax,
 Value Added Tax, Wealth tax, Service tax, Customs duty, Excise duty,
 Cess and other materia statutory dues as applicable with the
 appropriate authorities in India.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, there are no dues of Sales Tax,
 Value Added Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and
 Cess which have not been deposited on account of any dispute.  The
 particulars of dues of Income Tax which has not been deposited on
 account of a dispute are indicated in Note 26 of Schedule 22.
 
 (ix) The Company has no accumulated losses as at March 31, 2009 and it
 has not incurred any cash losses during the year ended on that date or
 in the immediately preceding financial year.
 
 (X) According to the records of the Company examined by us and the
 information and explanation given to us, the Company has not defaulted
 in repayment of its due to any financial institution or bank as at the
 balance sheet date, except for those items indicated in Note 27 of
 Schedule 22.
 
 (xi) The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 (xii) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company
 
 during the year for loans taken by others from banks or financial
 institutions, are not prejudicial to the interest of the Company.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, on an over all basis, the term loans have been applied for
 the
 
 purposes for which they were obtained.
 
 (xiv) On the basis of an overall examination of the balance sheet of
 the Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short-term
 basis which have been used for long-term investment.
 
 (xv) The company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Act during the year.
 
 (xvi) During the course of our examination of the books of account,
 carried out in accordance with the generally accepted auditing
 practices in India,
 
 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.
 
 (xvii) Clauses, (ii), (xiii), (xiv), (xix) and xx of paragraph 4 of the
 Companies (Auditor’s Report) Order 2003 as amended by the Companies
 (Auditor’s Report) (Amendment) order, 2004, are not applicable in the
 case of the Company for the current year, since in our opinion there is
 no matter which arises to be reported in the aforesaid order.
 
                                                            J. SEKAR
                                                             Partner
                                              (Membership No.F23800)
 Chennai                                      For and on behalf of
 June 30, 2009                                   PRICE WATERHOUSE
                                            Chartered Accountants