We have audited the attached balance sheet of M/s LOGIX MICROSYSTEMS
LIMITED, BANGALORE (the Company) as at March 31, 2008 and the profit
& loss account and 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.
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 misstatements. 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 statements.
We believe that our audit provides a reasonable basis for our opinion.
As required by the Companies (Auditors Report) Order, 2003 as amended
by the Companies (Auditors Report) Order, 2004, issued by the Central
Government of India in terms of sub-section (4A) of section 227 of the
Companies Act, 1956, we further enclose in the annexure, a statement on
the matters specified in paragraphs 4 and 5 of the said Order to the
extent applicable to the Company.
Further to our comments in the Annexure referred 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
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
c the Balance Sheet and the Profit and Loss Account and Cash Flow
Statement referred to in this report are in agreement with the books of
d We further report that:
i In the absence of a comprehensive system of documentation for
recording the stage of completion vis-a-vis its monetization, we are
unable to comment on the basis of valuation of software products work-
in-progress valued at Rs. 599.09 lacs as at the year end.
ii Attention is drawn to Note No 30(b) in Schedule 24 in respect of
accounting of share based compensation costs. The company has adopted
the Intrinsic Value Method and recognized expense of Rs. 80.29 lakhs.
However, the Company has not disclosed the impact on net results and
EPS (both basic & diluted) had the Fair Value Method been used.
e. Subject to the above, and further non-adherence to the requirement
of Actuarial Valuation as required by Accounting Standard 15, though
the company has made a provision for employee benefits as per the
employment rules the impact of which has not been quantified, the
profit and loss account and the balance sheet comply with the
accounting standards referred to in sub-section 3(c) of Section 211 of
the Companies Act 1956.
f. On the basis of written representations received from the Directors,
as at March 31, 2008 and taken on record by the Board of Directors, we
report that none of the directors are disqualified as at March 31,
2008, from being appointed as a director in terms of clause (g) of
sub-section (1) of Section 274 of the Companies Act, 1956.
g. Subject to above and further subject to the Notes on accounts in
general, in our opinion and to the best of our information and
according to the explanations given to us, the said Balance Sheet and
the Profit and Loss Account and Cash Flow Statement read together with
the notes thereon 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 31st March, 2008;
ii. in the case of the Profit and Loss Account, of the profit for the
year ended on that date.
iii. in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE
THE ANNEXURE REFERRED TO IN THE AUDITORS REPORT TO THE MEMBERS OF
LOGIX MICROSYSTEMS LIMITED (THE COMPANY) FOR THE YEAR ENDED MARCH 31,
i. a. We are given to understand that, the Company is in the process of
updating its records showing full particulars including quantitative
details and situation of its Fixed Assets.
b. The Company has a regular system of physical verification of its
fixed assets by which fixed assets are verified in a phased manner over
a period of 3 years. In our opinion, this periodicity of physical
verification is reasonable having regard to the size of the Company and
the nature of its assets. No Material discrepancies were noticed on
c. No substantial part of fixed assets has been disposed off during
a. According to information and explanations given to us, the
management has conducted physical verification of inventory at
b. The procedure being followed by the management with regard to
physical verification of inventory is reasonable and adequate in
relation to the size of the company and the nature of its business.
c. The company has maintained proper records of inventory. As
explained to us, no material discrepancies were noted on physical
a. During the year, the company has neither granted nor taken any
loans, secured or unsecured to or from companies, firms or other
parties covered in the register maintained under section 301 of the
Companies Act, 1956. Consequently the related clauses iii (b, c & d)
are not applicable.
iv. In our opinion and according to information and explanation given
to us, having regard to the explanation that certain items purchased
are of special nature for which suitable alterative sources do not
exist for obtaining comparative quotations, there are adequate internal
control procedures commensurate with the size of the company and the
nature of its business, for the purchase of material and fixed assets
and for the sale of goods. Further, on the basis of our examination of
the books and records of the company carried out in accordance with the
auditing standards generally accepted in India and according to the
information and explanations given to us, we have not observed nor have
been informed of any continuing failure to correct major weaknesses in
internal controls in these areas.
a In our opinion and according to the information and explanations
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 information and explanations given to
us, there are no transactions made in pursuance of such contracts or
arrangements and exceeding Rs. 5 lacs in respect of any party during
the year, which have been made at prices which are not reasonable
having regard to the prevailing market prices at the relevant time.
vi. The Company has not accepted deposits from the public during the
year and thus the provisions of section 58A and 58AA is not applicable.
vii. Though the company has an internal audit process, the same is to
be strengthened to make it commensurate with the size and nature of its
viii. The Central Government has not prescribed the maintenance of cost
records under clause (d) of sub-section (1) of section 209 of the
Companies Act, 1956 for any of the Services rendered by the Company.
a The Company is regular in depositing undisputed applicable statutory
dues including PF, Sales tax, Wealth Tax, Custom Duty, Cess and any
other statutory dues with the appropriate authorities subject to few
instances of delays in remittance of Tax deducted at Source. The
amounts outstanding for a period exceeding six months from the date
they became payable as at the year-end amount to Provident Fund Rs.
0.48 lacs which has been subsequently paid & Unclaimed dividend pending
transfer to the Investor Education & Protection Fund of Rs 0.61 lacs.
b In our opinion and according to information and explanations given to
us, there are no dues of Provident Fund, Wealth Tax, Income Tax, Sales
Tax, Service Tax, Custom Duty, Excise Duty, Cess which have not been
deposited on account of any dispute.
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. According to the information and explanations given to us and on
the basis of examination of books of accounts, the Company has not
defaulted in repayment of dues to financial institutions or banks
during the year.
xii. Adequate documents and records are maintained in cases where the
company has 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
xiv. The Company makes investments in Shares, Mutual Fund units and
other Investments for which proper records have been maintained for the
transactions and contracts; and timely entries have been made for the
same. These investments have been held by the company in its own name.
xv. As explained to us, the Company has not given any guarantee for
loans taken by others from bank or financial institutions.
xvi. In our opinion, and according to the information and explanations
given to us, on an overall basis, during the year, the term loans taken
by the Company have been applied for the purposes for which they were
xvii. On the basis of on overall examination of the balance sheet of
the company, in our opinion and according to the explanations given to
us, there are no funds raised on a short term basis which have been
used for long term investments.
xviii. The Company has made preferential allotment of shares to parties
covered in the register mentioned under section 301 of the Companies
Act, 1956during the current year. The pricing for the issue was in
accordance with the applicable SEBI guidelines and is not prejudicial
to the interest of the company.
xix. No debentures have been issued by the company during the year and
thus creation of securities for the same is not applicable to the
xx. The end-use of the funds raised by way of issue of equity shares
have been disclosed in the notes forming part of the financial
xxi. As explained to us and based on our examination of the books and
records of the company carried out in accordance with generally
accepted auditing practices in India, no fraud on or by the Company has
been noticed or reported during the course of our audit.
for VASAN & SAMPATH,
Place: Bangalore Partner
Date : September 5 2008 Membership No : 205703