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PCS Industries

BSE: 517119|ISIN: INE834B01012|SECTOR: Computers - Hardware
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« Mar 14
Auditor's Report (PCS Industries) Year End : Mar '15
I have audited the accompanying standalone financial statements of PCS
 Technology Limited (the Company), which comprise the Balance
 Sheet as at 31st March, 2015, the Statement of Profit and Loss, the
 Cash Flow Statement for the year then ended, and a summary of the
 significant accounting policies and other explanatory information.
 
 2. Management''s Responsibility for the Standalone Financial
 Statements
 
 The Company''s Board of Directors is responsible for the matters
 stated in Section 134(5) of the Companies Act, 2013 (the Act)
 with respect to the preparation of these standalone 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 principles generally accepted in India, including the
 Accounting Standards specified under Section 133 of the Act, read with
 Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility
 also includes maintenance of adequate accounting records in accordance
 with the provisions of the Act for safeguarding the assets of the
 Company and for preventing and detecting frauds and other
 irregularities; selection and application of appropriate accounting
 policies; making judgments and estimates that are reasonable and
 prudent; and design, implementation and maintenance of adequate
 internal financial controls, that were operating effectively for
 ensuring the accuracy and completeness of the accounting records,
 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.
 
 3. Auditor''s Responsibility
 
 i. My responsibility is to express an opinion on these standalone
 financial statements based on my audit.
 
 ii. I have taken into account the provisions of the Act, the accounting
 and auditing standards and matters which are required to be included in
 the audit report under the provisions of the Act and the Rules made
 thereunder.
 
 iii. I conducted my audit in accordance with the Standards on Auditing
 specified under Section 143(10) of the Act. 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.
 
 iv. An audit involves performing procedures to obtain audit evidence
 about the amounts and the disclosures in the financial statements. The
 procedures selected depend on the auditor''s judgment, 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 financial control relevant
 to the Company''s preparation of the financial statements that give a
 true and fair view in order to design audit procedures that are
 appropriate in the circumstances, but not for the purpose of expressing
 an opinion on whether the Company has in place an adequate internal
 financial controls system over financial reporting and the operating
 effectiveness of such controls. An audit also includes evaluating the
 appropriateness of the accounting policies used and the reasonableness
 of the accounting estimates made by the Company''s Directors, as well
 as evaluating the overall presentation of the financial statements.
 
 v. I believe that the audit evidence I have obtained is sufficient and
 appropriate to provide a basis for my audit opinion on the standalone
 financial statements.
 
 4. Opinion
 
 In my opinion and to the best of my information and according to the
 explanations given to me, the aforesaid standalone 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, of the state of affairs of the Company as
 at 31st March, 2015, and its profit and its cash flows for the year
 ended on that date.
 
 5. Report on Other Legal and Regulatory Requirements
 
 As required by ''the Companies (Auditor''s Report) Order, 2015''
 issued by the Central Government of India in terms of sub-section (11)
 of section 143 of the Act (hereinafter referred to as the Order),
 and on the basis of such checks of the books and records of the Company
 as I considered appropriate and according to the information and
 explanations given to me, I give in the Annexure a statement on the
 matters specified in paragraphs 3 and 4 of the Order.
 
 6. As required by Section 143 (3) of the Act, I report that:
 
 i. I have sought and obtained all the information and explanations
 which to the best of my knowledge and belief were necessary for the
 purposes of my audit.
 
 ii. In my opinion, proper books of account as required by law have been
 kept by the Company so far as it appears from my examination of those
 books.
 
 iii. The Balance Sheet, the Statement of Profit and Loss, and the Cash
 Flow Statement dealt with by this Report are in agreement with the
 books of account.
 
 iv. In my opinion, the aforesaid standalone financial statements comply
 with the Accounting Standards specified under Section 133 of the Act,
 read with Rule 7 of the Companies (Accounts) Rules, 2014; read with
 Note 31 to the financial statements for the year ended 31st March 2015,
 regarding scheme of Amalgamation and Arrangement.
 
 v. On the basis of the written representations received from the
 directors as on 31st March, 2015 taken on record by the Board of
 Directors, none of the directors is disqualified as on 31st March, 2015
 from being appointed as a director in terms of Section 164 (2) of the
 Act.
 
 vi. With respect to the other matters to be included in the Auditor''s
 Report in accordance with Rule 11 of the Companies (Audit and Auditors)
 Rules, 2014, in my opinion and to the best of my information and
 according to the explanations given to me:
 
 a. The Company has disclosed the impact of pending litigations on its
 financial position in its financial statements - Refer Note 30 to the
 financial statements;
 
 b. The Company did not have any long-term contracts including
 derivative contracts for which there were any material foreseeable
 losses.
 
 c. There were no amounts which were required to be transferred to the
 Investor Education and Protection Fund by the Company.
 
 ANNEXURE TO THE AUDITOR''S REPORT (i) (a) The Company has maintained
 proper records showing full particulars including quantitative
 detailsand situation of fixed assets.
 
 (b) The assets have been physically verified by the management during
 the year and no major discrepancies were noticed on such verification.
 
 (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) There is no stipulation as to the time period for payment of
 the principal amount of unsecured loans granted.
 
 (b) 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 (b) of clause (iii) of paragraph 3 of the Order are not
 applicable.
 
 (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) The Company has not accepted any deposits from the public and
 hence, the provisions of clause (v) of paragraph 3 of the Order are not
 applicable to the Company.
 
 (vi) 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.
 
 (vii) (a) The Company is generally regular in depositing undisputed
 statutory dues including provident fund,employees'' state insurance,
 income tax, sales tax, wealth tax, service tax, duty of customs, duty
 of excise,vaue added tax,cess and any 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, employees''
 state insurance, income-tax, sales-tax, wealth tax, service tax, duty
 of customs, duty of excise, value added tax, cess and any other
 statutory dues were in arrears as at 31st March 2015 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, duty of customs, duty of excise, value added
 tax and cess as at 31st March 2015 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 Dec2004 - Mar2009.
 
 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
 Sept2006 - Mar2010.
 
 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 Apr2004 -
 Mar2005.
 
 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 Apr2006 - Mar2007.
 
 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. The Company has deposited Rs. 50 lakhs as pre-deposit
 under protest.
 
 6 The Company has received an order of Rs.43,11,000 in FY 2006-07 from
 Commissioner of Central Excise (Appeal) Mumbai on account of alleged
 non-submission of import documents of various goods under Project
 Import Regulation Act 1986.
 
 The Company has filed as appeal before CESTAT Mumbai, on the grounds of
 merits of the case. The Hon''ble High Court of Judicature at Bombay has
 set aside the order of CESTAT dated 8th June 2006 for pre-deposit of
 Rs.15 lakhs.
 
 7 The Company has received a show cause notice u/s 73 of Finance Act
 1994 from Commissioner Of Service Tax, Mumbai demanding Rs.25,21,282 on
 account of wrong availment of Cenvat Credit for the period Apr2012 -
 Mar2013.
 
 The Company has filed its reply denying the demand on the merits and
 grounds.
 
 (c) During the financial year covered by my audit, no amount was
 required to be transferred to investor education and protection fund.
 
 (viii) 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.
 
 (ix) According to the information and explanations given to me, the
 Company has not defaulted in repayment of dues to financial
 institutions or banks.
 
 (x) 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.
 
 (xi) The Company has not raised any new term loan during the year and
 therefore clause (xi) of the said Order relating to application of term
 loan for the purpose for which it was obtained is not applicable.
 
 (xii) 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
 
                                               S.C. BANDI
 
                                              (Proprietor)
 
                                               M.No.16932
 
 Place: Mumbai
 Date : 30th May 2015
 
Source : Dion Global Solutions Limited
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