Nucleus Software

We have audited the attached Balance Sheet of Nucleus Software Exports
 Ltd. (‘the Company’) as at 31 March 2009, the Profit and Loss Account
 and 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
 for our opinion.
 
 As required by the Companies (Auditor’s Report) Order, 2003 (‘the
 Order’) 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.
 
 Further to our comments in the Annexure referred to above, we report
 that:
 
 (a) 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) 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;
 
 (c) the Balance Sheet, the Profit and Loss Account and the 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 the
 Cash Flow Statement dealt with by this report comply with the
 accounting standards prescribed by Companies (Accounting Standards)
 Rules, 2006, to the extent applicable;
 
 (e) on the basis of written representations received from the
 Directors, as on 31 March 2009, and taken on record by the Board of
 Directors, we report that none of the Directors of the Company is
 disqualified as on 31 March 2009 from being appointed as a director in
 terms of clause (g) of sub- section (1) of Section 274 of the Companies
 Act, 1956; and
 
 (f) 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:
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31 March 2009;
 
 (ii) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (iii) in the case of Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 Annexure to the Auditors’ report
 
 The Annexure referred to in our report to the members of Nucleus
 Software Exports Ltd. (‘the Company’) for the year ended 31 March 2009.
 We report that:
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a regular programme of physical verification of its
 fixed assets by which all fixed assets are verified in a phased manner
 over a period of three years. In accordance with this programme,
 management has during the year physically verified computers and
 furniture and fixtures at its facility in Noida. In our opinion, this
 periodicity of physical verification is reasonable having regard to the
 size of the Company and the nature of its assets. As informed to us, no
 material discrepancies were noticed on such verification.
 
 (c) None of the fixed assets were disposed off during the year.
 
 (ii) The Company is a service company, primarily rendering software
 services. Accordingly it does not hold any physical inventories. Thus,
 the provisions of paragraph 4(ii) of the Order are not applicable to
 the Company.
 
 (iii) (a) The Company has granted an interest free loan to one of its
 wholly owned subsidiary company, covered in the register maintained
 under Section 301 of the Companies Act, 1956. The maximum amount
 outstanding during the year was Rs.25,114,849 and the year end balance
 of such loan as at 31 March 2009 was Rs. 25,114,849. As informed to us,
 the Company has not granted any other loan, secured or unsecured to
 other companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 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.
 
 (b) According to the information and explanations given to us, we are
 of the opinion that the terms and conditions on which the loan has been
 granted to the subsidiary company listed in the register maintained
 under Section 301 of the Companies Act, 1956 are not, prima facie,
 prejudicial to the interest of the Company.
 
 (c) According to the terms of the interest free loan agreement between
 the Company and its wholly owned subsidiary company per (iii) (a)
 above, no portion of principal amount was repayable during the current
 year.
 
 (d) There are no amounts overdue as at 31 March 2009 in respect of loan
 granted to the company mentioned in (iii) (a) above in accordance with
 the terms of the interest free loan agreement.
 
 (iv) In our opinion and according to the information and explanations
 given to us and having regard to the explanation that services rendered
 are for the specialised requirements of the buyers and suitable
 alternative sources are not available to obtain comparable quotations,
 there is an adequate internal control system commensurate with the size
 of the Company and the nature of its business with regard to purchase
 of fixed assets and sale of services.  The activities of the Company do
 not involve purchase of inventory and sale of goods. We have not
 observed any major weakness in the internal control system during the
 course of the audit.
 
 (v) (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 Companies Act, 1956 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, the transactions made in pursuance of contracts and
 arrangements referred to in (a) above and exceeding the value of Rs 5
 lakh with any party during the year have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time except for purchase and sale of certain types of services
 which are for the specialized requirements of the Company and the
 buyers respectively and for which alternative sources are not available
 to obtain comparable quotations. However, on the basis of information
 and explanations provided, the same appear reasonable.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size of the company and nature of its business.
 
 (viii) The Central Government has not prescribed the maintenance of
 cost records under Section 209(1)(d) of the Companies Act, 1956 in
 respect of services rendered by the Company.
 
 (ix) (a) According to the information and explanations given to us and
 on the basis of our examination of the records of the Company, amounts
 deducted/accrued in the books of account in respect of undisputed
 statutory dues including Provident Fund, Employees’ State Insurance,
 Income-tax, Sales tax, Wealth tax, Service tax, Customs duty, Investor
 Education and Protection Fund and other material statutory dues have
 been generally regularly deposited during the year by the Company with
 the appropriate authorities.  As explained to us, the provisions of
 Excise duty are not applicable to the Company.
 
 There were no dues on account of cess under Section 441A of the
 Companies Act, 1956 since the date from which the aforesaid section
 comes into force has not yet been notified by the Central Government.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Employees’
 State Insurance, Income- tax, Sales tax, Wealth tax, Service tax,
 Customs duty and other material statutory dues were in arrears as at 31
 March 2009 for a period of more than six months from the date they
 became payable.
 
 (b) According to the information and explanations given to us, there
 are no dues of Income tax, Sales tax, Wealth tax, Service tax, and
 Customs duty which have not been deposited with the appropriate
 authorities on account of any dispute. As explained to us, the
 provisions of Excise duty are not applicable to the Company. In respect
 of Cess refer to our comments in para (ix) (a) above.
 
 (x) The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 and in the immediately preceding financial year.
 
 (xi) The Company did not have any outstanding dues to any financial
 institution, banks or debentureholders during the year.
 
 (xii) The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund or a nidhi/ mutual benefit
 fund/ society.
 
 (xiv) According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 (xv) 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.
 
 (xvi) The Company did not have any term loans outstanding during the
 year.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we are of
 the opinion that funds raised on short- term basis have not been used
 for long-term investment.
 
 (xviii)The Company has not made any preferential allotment of shares to
 companies, firms or parties covered in the register maintained under
 section 301 of the Companies Act, 1956.
 
 (xix) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company has not raised any money by public issues.
 
 (xxi) According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
                                                     for B S R & Co.
                                              Chartered Accountants
 
                                                               Sd/-
 
                                                      Vikram Advani
 Gurgaon                                                    Partner
 April 26, 2009                              Membership no.: 091765