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PCS Industries
BSE: 517119|ISIN: INE834B01012|SECTOR: Computers - Hardware
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« Mar 13
Auditor's Report (PCS Industries) Year End : Mar '14
I have audited the accompanying financial statements of PCS Technology
 Limited (the Company), which comprise of the Balance Sheet as at
 March 31, 2014, and the Statement of Profit and Loss and Cash Flow
 Statement for the year then ended, and a summary of significant
 accounting policies and other explanatory information.
 
 Management''s Responsibility for the Financial Statements:
 
 Management is responsible for the preparation of these financial
 statements that give a true and fair view of the financial position,
 financial performance and cash flows of the Company in accordance with
 the Accounting Standards referred to in sub- section (3C) of section
 211 of the Companies Act, 1956 (the Act). This responsibility
 includes the design, implementation and maintenance of internal control
 relevant to the preparation and presentation of the financial
 statements that give a true and fair view and are free from material
 misstatement, whether due to fraud or error.
 
 Auditor''s Responsibility:
 
 My responsibility is to express an opinion on these financial
 statements based on my audit. I conducted my audit in accordance with
 the Standards on Auditing issued by the Institute of Chartered
 Accountants of India. Those Standards require that I comply with
 ethical requirements and plan and perform the audit to obtain
 reasonable assurance about whether the financial statements are free
 from material misstatement.
 
 An audit involves performing procedures to obtain audit evidence about
 the amounts and disclosures in the financial statements. The procedures
 selected depend on the auditor''s judgement, including the assessment of
 the risks of material misstatement of the financial statements, whether
 due to fraud or error. In making those risk assessments, the auditor
 considers internal control relevant to the Company''s preparation and
 fair presentation of the financial statements in order to design audit
 procedures that are appropriate in the circumstances. An audit also
 includes evaluating the appropriateness of accounting policies used and
 the reasonableness of the accounting estimates made by management, as
 well as evaluating the overall presentation of the financial
 statements.
 
 I believe that the audit evidence I have obtained is sufficient and
 appropriate to provide a base for my audit opinion.
 
 Opinion:
 
 In my opinion and to the best of my information and according to the
 explanations given to me, the financial statements give the information
 required by the Act 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, 2014;
 
 (b) in the case of the Statement of Profit and Loss, 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.
 
 Report on other Legal and regulatory Requirements
 
 1. 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 Act, I give in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the Order.
 
 2. As required by section 227(3) of the Act, I report that:
 
 a. I have obtained all the information and explanations which to the
 best of my knowledge and belief were necessary for the purpose of my
 audit;
 
 b. in my opinion proper books of account as required by law have been
 kept by the Company so far as appears from my examination of those
 books;
 
 c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow
 Statement dealt with by this Report are in agreement with the books of
 account;
 
 d. in my opinion, the Balance Sheet, Statement of Profit and Loss, and
 Cash Flow Statement comply with the Accounting Standards referred to in
 sub section(3C) of section 211 of the Companies Act, 1956; read with
 note no. 31 of Notes to the Financial Statements for the year ended
 31st March 2014, regarding scheme of Amalgamation and Arrangement.
 
 e. on the basis of written representations received from the directors
 as on March 31, 2014, and taken on record by the Board of Directors,
 none of the directors is disqualified as on March 31, 2014, from being
 appointed as a director in terms of clause (g) of sub- section (1) of
 section 274 of the Companies Act, 1956.
 
 f. Since, the Central Government has not issued any notification as to
 the rate at which the cess is to be paid under Section 441A of the
 Companies Act, 1956 nor has it issued any rules under the said Section,
 prescribing the manner in which such cess is to be paid, no cess is due
 or payable by the Company.
 
 ANNEXURE TO THE AUDITOR''S REPORT
 
 (i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) The assets have been physically verified by the management during
 the year and no discrepancies were noticed on such verification.
 
 (c) The fixed assets disposed-off during the year; do not constitute a
 substantial part of the fixed assets of the Company.
 
 (ii) (a) The inventory has been physically verified during the year by
 the management. In my opinion, the frequency of verification is
 reasonable.
 
 (b) The procedures of physical verification of inventories followed by
 the management are reasonable and 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
 the book records were not material.
 
 (iii) (a) The Company has granted loans to two parties covered in the
 register maintained under section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs.270 lakhs and the
 balance at the end of the year is Rs.270 lakhs.
 
 (b) In my opinion, the rate of interest and other terms and conditions
 on which loans have been granted to the companies, firms or other
 parties 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) There is no stipulation as to the time period for payment of the
 principal amount of unsecured loans granted. Hence, the provisions of
 sub-clauses (c) and
 
 (d) of clause (iii) of paragraph 4 of the Order are not applicable.
 
 (e) The Company has taken loans from five parties covered in the
 register maintained under section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs.988 lakhs and the
 balance at the end of the year is Rs.330 lakhs.
 
 (f) In my opinion, the rate of interest and other terms and conditions
 on which loans have been taken from the companies, firms or other
 parties listed in the register maintained under section 301 of the
 Companies Act, 1956 are not prima facie prejudicial to the interest of
 the Company.
 
 (g) There is no stipulation as to the time period for payment of the
 principal amount of unsecured loans taken.
 
 (iv) In my opinion and according to the information and explanations
 given to me, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of business
 with regard to purchases of inventory, fixed asset and with regard to
 the sale of goods and services. During the course of my audit, no major
 weakness has been noticed in internal control system.
 
 (v) (a) In my opinion and according to the information and explanations
 given to me, 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 my opinion, and according to the information and explanations
 given to me, the contracts and arrangements entered in the register
 maintained under section 301 of the Companies Act, 1956 have been made
 at prices which are reasonable having regard to the prevailing market
 price.
 
 (vi) The Company has not accepted any deposits from the public and
 hence, the provisions of clause (vi) of paragraph 4 of the Order are
 not applicable to the Company.
 
 (vii) In my opinion and according to the information and explanations
 given to me, there is an adequate internal audit system commensurate
 with the size of the Company and the 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 for any
 of the products of the Company.
 
 (ix) (a) The Company is generally 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, custom duty, excise duty, cess and other
 statutory dues with the appropriate authorities.
 
 According to the information and explanations given to me, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees'' state insurance, income tax,
 sales tax, wealth tax, service tax, custom duty, excise duty, cess and
 other statutory dues were in arrears as at 31st March 2014 for a period
 of more than six months from the date they became payable.
 
 (b) According to the information and explanations given to me, the
 status of disputed dues payable in respect of income tax, sales tax,
 wealth tax, service tax, custom duty, excise duty and cess, as at 31st
 March 2014 is as follows:
 
 1 The Commissioner of Service Tax, Mumbai has passed an order
 confirming the demand of Rs.  2,29,04,559 (Previous Year: Rs.
 4,69,24,929) u/s 73 of Finance Act 1994 purchase of software under
 category of Intellectual Property Rights for the period Dec. 2004 -
 Mar. 2009.
 
 The Company has obtained the legal opinion that the software purchase
 does not attract provisions of Intellectual Property Rights under
 Service Tax Rules, and now is in process of filing appeal before
 Appellate Tribunal.
 
 2 The Company has received a demand of Rs. 19,12,633 from the
 Commissioner of Central Excise, Pondicherry u/s 11A of Central Excise
 Act imposing Central Excise on pre-loading of software for the period
 Sept. 2006 - Mar. 2010.
 
 The Company has filed an appeal before Appellant Tribunal Central
 Excise, Customs & Service Tax, Chennai. Tribunal has passed the order
 granting stay on the demand. The proceedings are pending before the
 Tribunal at Chennai.
 
 3 The Company has received a demand of Rs. 5,04,995 from the
 Commissioner Of Central Excise (Appeal), Vapi on the ground of
 irregular availment of Central Excise during the period Apr.  2004 -
 Mar. 2005.
 
 The Company has filed appeal before Appellant Tribunal Central Excise,
 Customs & Service Tax, Ahmedabad. Tribunal has passed the order
 granting stay on the demand. The proceedings are pending before the
 Tribunal at Ahmedabad.
 
 4 The Company has received a demand of Rs. 44,28,762 from the
 Commissioner of Central Excise(Appeal), Vapi on the ground of irregular
 availment of Central Excise during April 2004 - March 2005.
 
 The Company has filed appeal before Appellant Tribunal Central Excise,
 Customs & Service Tax, Ahmedabad. Tribunal has passed the order
 granting stay on the demand. The proceedings are pending before the
 Tribunal at Ahmedabad.
 
 5 The Company has received a Show Cause Notice from Director of
 Intelligence demanding Rs. 2,15,40,551 u/s 28 of Custom Act 1962 on
 account of Custom Duty on import of OPK from Microsoft during the
 period of Apr. 2006 - Mar. 2007.
 
 The proceedings are pending before Commissioner of Customs, Delhi. On
 the basis of the legal opinion obtained, the matter has merits in favor
 of the Company.
 
 (x) The Company has no accumulated losses and has not incurred any cash
 losses during the financial year covered by my audit or in the
 immediately preceding financial year.
 
 (xi) According to the information and explanations given to me, the
 Company has not defaulted in repayment of dues to financial
 institutions or banks.
 
 (xii) According to the information and explanations given to me, no
 loans and advances have been granted by the Company on the basis of
 security by way of pledge of shares, debentures and other securities
 and hence the clause (xii) of paragraph 4 of the said Order relating to
 maintenance of documents and records are not applicable.
 
 (xiii) In my opinion, the Company is not a chit fund or a nidhi/ mutual
 benefit fund/society. Therefore, the provisions of sub-clauses (a) to
 (d) of clause (xiii) of paragraph 4 of the said Order are not
 applicable to the Company.
 
 (xiv) In my opinion, the Company is not dealing in shares, securities
 and debentures and hence, the provisions of clause (xiv) of paragraph 4
 of the said Order are not applicable to the Company.
 
 (xv) In my opinion and according to the information and explanations
 given to me, the Company has not given any guarantee for loans taken by
 others from banks or financial institutions.
 
 (xvi) The Company has not raised any new term loan during the year and
 therefore clause (xvi) of the said Order relating to application of
 term loan for the purpose for which it was obtained is not applicable.
 
 (xvii) According to the information and explanations given to me and on
 an overall examination of the Balance Sheet of the Company, I report
 that no funds raised on short- term basis have been used for long-term
 investment.
 
 (xviii) During the year, the Company has not made any preferential
 allotment of preference shares to parties and companies covered in the
 register maintained under section 301 of the Companies Act, 1956.
 
 (xix) The Company has not issued any Debentures during the financial
 year covered by my audit.
 
 (xx) The Company has not raised any money by way of public issue during
 the year.
 
 (xxi) According to the information and explanations given to me, no
 fraud on or by the company has been noticed or reported during the
 course of my audit.
 
                                                    For S.C. Bandi & Co.
                                                   Chartered Accountants
                                                    Firm Reg. No.130850W
 
 Place: Mumbai                                                S.C. BANDI
 Date: 30th May 2014                                        (Proprietor)
                                                            M. No. 16932
Source : Dion Global Solutions Limited
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