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Encore Software Ltd.

BSE: 531750 | NSE: | Series: NA | ISIN: INE103B01012 | SECTOR: Computers - Software Medium & Small

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Annual Report

For Year :
2015 2014 2013 2012 2011 2010 2009 2008 2007

Auditor's Report

We have audited the accompanying financial statements of ENCORE SOFTWARE LIMITED (the Company), which comprise the balance sheet as at 31st March 2015, the statement of profit and loss and the 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 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 and presentation 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 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. AUDITOR''S RESPONSIBILITY Our responsibility is to express an opinion on these financial statements based on our audit. We 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 there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we 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 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements. BASIS OF QUALIFIED OPINION a) The entire net worth of the Company has been eroded. However the Company is continuing to prepare accounts under going concern concept. b) Provision for retirement benefits in the form of gratuity and leave encashment has been made on estimated basis instead of on actuarial valuation as on the balance sheet date in accordance with Accounting Standard (AS)-15 (revised) on ''Employee Benefits (refer note no. 2.8). The impact of the above on the ''loss'' for the year is unascertained. OPINION In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for qualified opinion paragraph, the aforesaid 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 31st March 2015; b) in the case of the Statement of Profit and Loss, of the loss 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, 2015 (the Order) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable. 2. As required by section 143(3) of the Act, we report that: a. We have sought and 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 Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account; d. In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 except for gratuity and leave salary which has been provided on estimated basis instead of obtaining actuarial valuation (refer note no 2.8); e. On the basis of written representations received from the directors as on 31st March 2015, taken on record by the Board of Directors, none of the directors are disqualified as on 31st March 2015, from being appointed as a director in terms of Section 164(2) of the Act; f. With respect to the other matters included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to our best of our information and according to the explanations given to us: i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements under contingent liabilities ii. The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses iii. There are no amounts required to be transferred to the Investor Education and Protection Fund by the Company. ANNEXURE TO INDEPENDENT AUDITOR''S REPORT ANNEXURE REFERRED TO IN OUR REPORT TO THE MEMBERS OF ENCORE SOFTWARE LIMITED FOR THE YEAR ENDED ON 31st MARCH 2015 i. a. The Company has maintained records showing full particulars, including quantitative details and the situation of its fixed assets. b. All the assets have been physically verified by the management during the year which, in our opinion, is reasonable having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such verification. ii. The Company is a service company, primarily rendering software services. Accordingly, it does not hold any physical inventories. Thus, paragraph 3(ii) of the Order is not applicable. iii. The Company has not granted any loans to companies, firms and other parties covered in the register maintained under section 189 of the Companies Act, 2013. Hence clause 3 (iii) (a) and (b) of the Companies Auditor''s Report Order, 2015 is not applicable to the Company for the year under review. iv. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls. v. According to the information and explanations given to us, the Company has not accepted any deposits and hence the requirement of clause 3 (v) of Companies (Auditor''s Report) Order, 2015 is not applicable to the Company during the year under review. vi. We have been informed that maintenance of books of accounts pursuant to the rules made by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 for maintenance of cost records in respect of products of the Company are not applicable to the Company for the year under review and hence the requirement of clause 3 (vi) of Companies (Auditor''s Report) Order, 2015 is not applicable to the Company during the year under review. vii. a. The Company has been generally regular in depositing with the appropriate authorities undisputed statutory dues including 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 applicable except service tax. Details of undisputed dues 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 applicable in arrears as at 31st March 2015 for a period of more than six months from the date they became payable are given below: Period to Name of the Nature of Amount which amount Statute Dues (Rs.) relates Finance Act Service Tax 51,09,656 2009-10 and 2010-11 Name of the Due date Date of payment Statute Various dates Not paid as on the date Finance Act of this report b. Details of dues income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess which have not been deposited with the relevant authorities as on 31st March 2015 on account of any dispute are given below: Nature of Name of the Statute Dues Related Period Amount (Rs.) Income Tax Act, 1961 Income Tax 2001-02 and 1,48,30,162 2005-06 Name of the Statute Forum where dispute is pending Income Tax Act, 1961 Commissioner of Income Tax (Appeals), Bangalore c. According to the records of the Company, there are no amounts required to be transferred to the Investor Education and Protection Fund by the Company in accordance with relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under. viii. The accumulated losses of the Company at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses during the financial year and in the preceding financial year. ix. Based on our audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution or bank or debenture holders hence the provisions of clause 3(ix) of the Companies (Auditor''s Report) Order, 2015 are not applicable to the company. x. As far as we could ascertain, the Company has not given guarantees for loans taken by others from banks or financial institutions and hence the provisions of clause 3(x) of the Companies (Auditor''s Report) Order, 2015 are not applicable to the company. xi. According to the information and explanations given to us, the Company has not availed any term loans during the year under review and hence the provisions of clause 3(xi) of the Companies (Auditor''s Report) Order, 2015 are not applicable to the company. xii. According to the information and explanations given to us, no material frauds on or by the Company that causes material misstatements to financial statements have been noticed or reported during the year. For Ishwar & Gopal Chartered Accountants K V Gopalakrishnayya Place: Bangalore Partner Date: 29th May 2015 Membership No. 021748 Firm Registration No. 001154S