We have audited the attached Balance Sheet of the iq infotech Limited,
#134/A, 2nd Floor, 3rd cross, 6lh main, Industrial Suburb,
Yeshwanthpur, Bangalore - 560 022, as at 31st March, 2011 and also the
Profit and Loss Account and the Cash Flow Statement of the Company 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.
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 of
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 paragraph 4 and
5 of the said order to the extent applicable.
Further to our comments in the Annexure referred to in paragraph 3
above, we state that:
a. We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of
b. 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 the
c. The Balance Sheet, Profit and Loss Account and Cash Flow Statement
referred to in this report are in agreement with the books of accounts.
d. In our opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in section 211 [3C] of Companies Act,
e. On the basis of the written representations received from the
Directors, and taken on record by the Board of Directors, we report
that none of the Directors is disqualified as on 31st March 2011 from
being appointed as a Director in Terms of Clause [g] of sub-section 
of section 274 of the Companies Act, 1956.
f. In our opinion and according to the information and explanations
given to us, the accounts read together with the notes and accounting
policies thereto, give the information required by the companies Act
1956, in the manner so required and gives a true and fair view in
conformity with the accounting principles generally accepted in India
a. In the case of Balance Sheet, of the state of affairs of the
Company as on 31st March 2011.
b. In the case of the Profit and Loss Account of the Loss of the
Company 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 REFERRED TO IN PARAGRAPH 3 OF THE AUDITORS'' REPORT TO THE
MEMBERS OF THE iQ INFOTECH LIMITED FOR THE YEAR ENDED 31ST MARCH 2011
1. a) The Company has maintained records showing particulars including
quantitative details and location of the fixed assets and the same is
b) There is a regular program of physical verification, which in our
opinion is reasonable, having regard to the size of the Company and the
nature of fixed assets. No materials discrepancies have been noticed by
the management in respect of the assets physically verified during the
c) Company has not sold substantial part of fixed assets during the
year. However, the company has sold the land and buildings belonging to
it during the year and the same is reflected in the books of accounts.
2. a. Inventories have been physically verified during the year by
the management. In our opinion, the frequency of verification is
b. The Procedures of physical verification of stocks followed by the
management are adequate in relation to the size of the Company and the
nature of its business.
c. The company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
book records were not material and have been properly dealt with in the
books of account.
3. a. As informed to us, the Company has not granted loans, secured
or unsecured or unsecured to companies, firms or other parties covered
in the register maintained under section 301 of the Companies Act,
b. As the Company has not granted any loans during the year to the
parties covered in the register maintained under section 301 of the
Companies Act, 1956 clause (b), (c) and (d) are not applicable
c. The Company has not taken unsecured loans during the period from
parties covered in the register maintained under section 301 of the
Companies Act, 1956 and hence provisions relating to terms conditions
and repayment are not applicable.
4. In our opinion, and according to the information and explanations
given to us, there are internal control procedures with regard to
purchase of raw materials, stores and spares, plant and machinery,
equipment and other assets but it needs to be strengthened.
5. a. All the transactions with parties covered under section 301 of
the Companies Act, 1956 have been properly entered, if and when
transaction takes place, in the register maintained under section 301
of the Act.
b. In our opinion and according to the information and explanations
given to us, the Company has not entered into transactions of sale or
purchase of goods, made in pursuance of contracts or arrangements
entered in the register maintained under Section 301 of the Companies
6. The Company has not accepted any deposits from the public during
7. The company has an internal audit system and it needs to be
8. Maintenance of cost records as per clause (d) of sub-section (1) of
section 209 of the Companies Act is not applicable to the Company.
9. a. In our opinion and according to the information and
explanations given to us, the Company is not regular in depositing
undisputed statutory dues including Provident Fund, Employees'' State
Insurance, sales tax, service tax and Excise Duty with appropriate
authorities. The company is generally regular in payment of Income Tax
and Customs Duty.
b. According to the information and explanations given to us,
undisputed amounts payable in respect of the following except income
tax, service tax, customs duty, excise duty and cess were in arrears,
as at 31st March 2010, for a period of more than six months from the
date they became payable;
Service Tax Rs. 2,73,387.00
PF Rs. 4,77,571.00
Tax Deducted at Source Rs. 2,88,018.00
10. The Company''s accumulated losses at the end of the financial year
is Rs. 13,57,71,963/. The company has not incurred cash losses during
the current year. In Immediately preceding financial year company has
incurred cash loss of Rs.61,98,024/-
11. The company does not have any overdue outstanding to any financial
institutions, banks or debenture holders during the year.
12. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. As the Company is not a chit fund, nidhi, mutual benefit fund or
society the provisions of clause 4[xiii] of the Companies [Auditor''s
Report] Order, 2003 is not applicable to the Company.
14. The Company is not dealing or trading in shares/securities/
debentures and other investments.
15. The Company has not given any guarantees for loans taken by others
from bank or financial institutions during the period under review.
16. In our opinion and according to the information and explanations
given to us by the management, term loans are applied for the purpose
for which the loans were obtained.
17. According to the information and explanations given to us and on
an overall examination of the balance sheet of the company, we report
that neither any short-term funds have been used for long-term purposes
nor any long-term funds have been used to finance short-term assets
except permanent working capital.
18. According to the information and explanations given to us, during
the period covered by our audit report, the company has not made any
preferential allotment of share to parties and companies covered in the
register maintained under section 301 of the Act.
19. The Company has not issued any debentures during the year.
20. The Company has not raised any money by way public issue during
21. 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 Pal and Shanbhougue.,
(ICAI FRN 002528S)
Membership No: 018578
Date : 3rd September2011