Digital Globalsoft

ANNUAL REPORT 2005-2006
 
 AUDITORS' REPORT
 
 1. We have audited the attached Balance Sheet of Hewlett-Packard Globalsoft 
 Limited  as at March 31, 2006 and also the Profit and Loss account and  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 (Auditor's 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.  Further  to our comments in the Annexure referred to 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 audit;
 
 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.
 
 v. On the basis of the written representations received from the directors, 
 as  on  March 31, 2006, and taken on record by the Board of  Directors,  we 
 report that none of the directors is disqualified as on March 31, 2006 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 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, 2006; 
 
 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 S.R. BATLIBOI & COMPANY
 Chartered Accountants
 
 per Sunil Bhumralkar
 Partner
 Membership No.: 35141
 
 Place: Bangalore
 Date : June 14, 2006
 
 Annexure referred to in paragraph 3 of our report of even date 	
 
 Re: HEWLETT-PACKARD GLOBALSOFT LIMITED 
 
 1)  The  Company has maintained proper records  showing  full  particulars, 
 including  quantitative details and situation of fixed assets. The  Company 
 has a policy of verifying fixed assets at reasonable intervals. In terms of 
 the  policy, the Company has carried out a physical verification  of  fixed 
 assets during the year and the discrepancies noticed were not material when 
 compared  to  the book records and have been adequately considered  in  the 
 accounts.  There a was no substantial disposal of fixed assets  during  the 
 year.
 
 2)  The  Company  did  not hold any stock of  inventory.  In  view  of  the 
 foregoing,  the  provisions  of clause 4(ii) of  the  Companies  (Auditor's 
 Report) Order, 2003 (as amended) are not applicable. 
 
 3) As informed, the Company has not granted any loans, secured or unsecured 
 to  companies,  firms or other parties covered in the  register  maintained 
 under section 301 of the Companies Act, 1956.
 
 4)  As informed, 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 Companies Act, 1956.
 
 5)  In our opinion and according to the information and explanations  given 
 to  us,  having regard to the explanation that some items  are  of  special 
 nature  for  which  alternate quotations cannot be obtained,  there  is  an 
 adequate internal control system commensurate with the size of the  Company 
 and  the nature of its business, for the purchase of fixed assets  and  for 
 the sale of software products and services. During the course of our audit, 
 no  major  weakness  has been noticed in the  internal  control  system  in 
 respect  of  these  areas. During the year, there are  no  transactions  of 
 purchase of inventory.
 
 6)  Based  on  the audit procedures performed by us and  according  to  the 
 information  and  explanations provided by the management, we  are  of  the 
 opinion  that  there were no transactions that need to be  entered  in  the 
 register maintained under section 301 of the Companies Act, 1956.
 
 7) The Company has not accepted any deposits from the public.
 
 8) The Company has an internal audit system, commensurate with the size and 
 the nature of its business.
 
 9)  To the best of our knowledge and as explained, 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, for the products  of 
 the Company.
 
 10)  According to the information and explanations given to us and  on  the 
 basis of our examination of the books of account, the Company is regular in 
 depositing  undisputed  statutory dues including provident  fund,  investor 
 education  and  protection fund, employees' state  insurance,  income  tax, 
 sales  tax,  wealth tax, service tax, customs duty, excise duty,  cess  and 
 other   material   statutory  dues  applicable  to  it   with   appropriate 
 authorities.
 
 According  to the information and explanations given to us,  no  undisputed 
 amounts  payable  in  respect of provident  fund,  investor  education  and 
 protection  fund,  employees'  state insurance,  income  tax,  wealth  tax, 
 service  tax,  sales  tax,  customs  duty,  excise  duty,  cess  and  other 
 undisputed  statutory dues were outstanding, at the year end, for a  period 
 of more than six months from the date they became payable.
 
 According  to  the records of the Company, the dues outstanding  of  income 
 tax, sales tax, wealth tax, service tax, custom duty, excise duty and  cess 
 on account of any dispute are as follows:
 
 Name of the      Nature of dues	          Amount     Forum where dispute is 
 statute                                    (Rs.)     pending
 
 1. West Bengal   Tax and surcharge on   16,853,240   Assistant Commissioner 
 Sales Tax Act,	 additional turnover                 of Commercial Taxes 
 1994	         as assessed by the                  (Appeals) Kolkata
 		 Assessing Officer
 
 2. Central	 Tax and surcharge on	 5,583,174   Deputy Commissioner of
 Sales Tax Act,	 additional turnover                 Commercial Taxes 
 1956	         as assessed by the                  (Appeals) Kolkata
 		 Assessing Officer
 
 3. West Bengal	 Disputed Works          1,741,317   Deputy Commissioner of
 Sales Tax Act,	 Contract liability                  Commercial Taxes 
 1994	         on Annual Maintenance               (Appeals) West Bengal 
                  Contracts                           Sales Tax
 
 4. Central Sales Non receipt of          1,784,162   Deputy Commissioner 
 Tax Act, 1956	 C-Form	 		             (Appeals), West Bengal 
                                                      Sales Tax
 
 5. Bombay Sales	 Composite sale of       1,186,241   Maharastra Sales Tax 
 Tax Act, 1959    assets	                             Tribunal
 
 6. Income Tax    Dispute with regard   206,066,716   Commissioner of
 Act, 1961	 to method of          (See Note     Income Tax (Appeals)
 		 computation of                      Below)
 		 exemption allowable	
                  under section 10A 
                  and interest thereon
 
 Note: 
 
 Out of this, Rs 80,000,000 has been paid to The Income Tax Authority in the 
 current year.
 
 11) The Company has no accumulated losses at the end of the financial  year 
 and  it  has not incurred any cash losses in the  current  and  immediately 
 preceding financial year.
 
 12) The Company has not defaulted in repayment of dues with regard to loans 
 obtained  tinder  finance lease obligation. The Company has not  taken  any 
 other  loans  from  any  financial institutions  or  bank  nor  issued  any 
 debentures.
 
 13) According to the information and explanations given to us and based  on 
 the documents and records produced to us, the Company has not granted loans 
 and  advances  on  the  basis  of security by  way  of  pledge  of  shares, 
 debentures and other securities.
 
 14)  In  our  opinion, the Company is not a chit  fund  or  a  Nidhi/mutual 
 benefit  fund/society. Therefore, the provisions of clause 4(xiii)  of  the 
 Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to 
 the Company.
 
 15)  In  our opinion, the Company is not dealing in or trading  in  shares, 
 securities,  debentures and other investments. Accordingly, the  provisions 
 of  clause  4(xiv)  of the Companies (Auditor's  Report)  Order,  2003  (as 
 amended) are not applicable to the Company.
 
 16) According to the information and explanations given to us, the  Company 
 has  not  given  any  guarantee for loans taken by  others  from  banks  or 
 financial institutions.
 
 17)  Finance  lease obligation disclosed as Secured Loan was used  for  the 
 purpose of leasing vehicles. The Company did not have any other outstanding 
 borrowings during the year.
 
 18)  According  to the information and explanations given to us and  on  an 
 overall  examination  of the balance sheet and cash flow statement  of  the 
 Company, we report that no funds raised on short-term basis have been  used 
 for long-term investment.
 
 19)  The  Company  has not made any preferential  allotment  of  shares  to 
 parties or companies covered in the register maintained under section301 of 
 the Companies Act,1956.
 
 20) The Company did not have any outstanding debentures during the year.
 
 21) The Company has not raised any money through a public issue during  the 
 year.
 
 22) Based upon the audit procedures performed for the purpose of  reporting 
 the  true  and  fair  view  of the financial  statements  and  as  per  the 
 information  and  explanations given by the management, we report  that  no 
 fraud  on or by the Company has been noticed or reported during the  course 
 of our audit.
 
 For S.R. Batliboi & Company 
 Chartered Accountants
 
 per Sunil Bhumralkar 
 Partner 
 Membership No.: 35141
 
 Place: Bangalore 
 Date : June 14, 2006