Polaris Software Lab

1.  We have audited the attached Balance Sheet of Polaris Software Lab
 Limited (the Company) as at March 31, 2009 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 Companys 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 (Auditors 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, 2009 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2009 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956;
 
 vi. Without qualifying our opinion, we draw attention to note B 15(b)
 of schedule 16 of the financial statements regarding management
 assessment of the carrying value of its investment in Adrenalin
 eSystems Limited, an associate company, as at March 31, 2009. The
 Associate Company has been incurring losses on account of initial stage
 of operations. The management believes that this is a strategic
 investment and the losses are not permanent in nature. Accordingly,
 such investments have been carried at cost;
 
 vii 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, 2009;
 
 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 cash flow statement, of the cash flows for the year
 ended on that date.
 
 Annexure referred to in paragraph 3 of our report of even date
 
 Re: Polaris Software Lab Limited
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All fixed assets have not been physically verified by the
 management during the year but there is a regular programme of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets.  As informed, no
 material discrepancies were noticed on such verification.
 
 (c) There was no disposal of a substantial part of fixed assets during
 the year.
 
 (ii) Due to the nature of business, the Company has no inventories and
 accordingly the provisions of clause 4(ii) of the Companies (Auditors
 Report) Order, 2003 (as amended) are not applicable to the Company.
 
 (iii) (a) The Company has granted loans to four subsidiaries covered in
 the register maintained under section 301 of the Companies Act, 1956.
 The maximum amount involved during the year was Rs. 2,657.42 lacs and
 the year-end balance of loans granted to such subsidiaries is Rs.
 1,749.34 lacs.
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions for
 such loans are not prima facie prejudicial to the interest of the
 Company.
 
 (c) In respect of loans granted, repayment of the principal amount is
 as stipulated and payment of interest have been regular.
 
 (d) There is no overdue amount more than rupees one lakh of loan
 granted to the company listed in the register maintained under section
 301 of the Companies Act, 1956.
 
 (e) 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 and
 accordingly the provisions of clause 4(iii)(f) and (g) of the Companies
 (Auditors Report) Order, 2003 (as amended) are not applicable to the
 Company.
 
 (iv) In our opinion and according to the information and explanations
 given to us, 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 services. During the
 course of our audit, no major weakness has been noticed in the internal
 control system in respect of these areas. The activities of the Company
 do not involve purchase of inventory and the sale of goods.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in section 301 of the Act that need to be
 entered into the register maintained under section 301 have been so
 entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs have been entered
 into during the financial year at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 (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 and nature of its business.
 
 (viii) 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.
 
 (ix) (a) The Company is generally regular in depositing with
 appropriate authorities undisputed statutory dues including provident
 fund, employees state insurance, income-tax, sales-tax, wealth-tax,
 service tax, customs duty, cess and other material statutory dues
 applicable to it. As explained to us, the Company did not have any dues
 on account of Investor Education and Protection Fund. Statutory dues in
 respect of excise duty are not applicable to the Company.
 
 (b) 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, 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.
 
 (c) According to the records of the Company, there are no dues
 outstanding of wealth- tax, service tax, customs duty and cess on
 account of any dispute. Dues outstanding of income-tax, sales-tax on
 account of any dispute, are as follows:
 
 Name of the  Nature of    Amount
 statute      dues       (Rs. In lacs)
 
 Income Tax    Income       118.21
 Act, 1962     Tax
 
 Income Tax    Income       507.49
 Act, 1962     Tax
 
 Income Tax    Income       769.02
 Act, 1962     Tax
 
 Income Tax    Income       864.44
 Act, 1962     Tax
 
 Income Tax    Income        97.25
 Act, 1962     Tax
 
 Tamil Nadu    Sales        520.00
 General       Tax
 Sales Tax
 Act 1959
 
 Central       Central       12.55
 Sales tax     Sales
 Act 1956      tax
 
 Central       Central       29.85
 Sales tax     Sales
 Act 1956      tax
 
 Period to which the              Forum where
 amount relates            dispute is pending
 
 Financial Year 2000-01,          High Court
 (Assessment Year
 2001-02)
 
 Financial Year 2001-02,          High Court
 (Assessment Year
 2002-03)
 
 Financial Year 2002-03,         Income tax
 (Assessment Year                 Appellate
 2003-04)                          Tribunal
 
 Financial year 2003-04,    Commissioner of
 (Assessment Year                Income Tax
 2004-05)                         (Appeals)
 
 Financial year 2004-05,    Commissioner of
 (Assessment Year                Income Tax
 2005-06)                         (Appeals)
 
 Financial Year                  High Court
 2004 - 05
 
 Financial year                  High Court
 2006-07
 
 Financial year                  High Court
 2007-08
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) The Company has not defaulted in repayment of dues to a bank. The
 Company has no dues in respect of a financial institution and has not
 issued any debentures during the year.
 
 (xii) 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.
 
 (xiii) 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 (Auditors Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) 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 (Auditors Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (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 report
 that no funds raised on short-term basis have been used for long-term
 investment.
 
 (xviii)The Company has not made any preferential allotment of shares to
 parties or companies 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) During the year the Company has not raised any money by way of
 public issue and accordingly the provisions of clause 4 (xx) of the
 Companies (Auditors Report) Order 2003 (as amended) are not applicable
 to the Company.
 
 (xxi) 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. BATUBOI & ASSOCIATES 
                                                Chartered Accountants
 
                                               per S Balasubrahmanyam
                                                              Partner
                                                Membership No: 053315
 
 Chennai
 April 20, 2009