1. We have audited the attached balance sheet of M/s EOGIX
MICROSYSTEMS LIMITED, BANGALORE (the Company) as at March 31,2010 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.
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 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
bv management, as well as evaluating the overall financial statements.
We believe that our audit provides a reasonable basis for our opinion.
3. 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.
4. We further report that:
(i) In the absence of a comprehensive system of documentation for
recording the stage of completion and related costs, we are unable to
comment on the basis of valuation of software products work-in-progress
valued at Rs. 1.98 crores & Rs.6.31 crores as at 31st March 10& 31st
March 09 respectively and its consequent impact, if any, on the Profit
& Loss account and Balance Sheet.
(ii) As detailed in Note No 13(b) in Schedule 22, the remuneration paid
to the managing director is in excess of limits prescribed under the
Schedule XII of the Companies Act by an amount of Rs. 0.41 Crores. The
company has not obtained the prior approval of the central government
for the same.
(iii) Long term investments as at the Balance Sheet date include Rs.
116 crores in wholly owned subsidiaries at US and Belgium, which are
carried at cost. We are given to understand that the accounts of the
same are not subject to audit or limited review. In the absence of
independently reviewed / audited financial statements in respect of
these subsidiaries (including their step down subsidiaries), we are
unable to carry out necessary procedures to reliably examine if there
has been a permanent decline in the carrying value of the stated
investments. We are therefore unable to comment on the impact, if any,
on the Profit & Loss account and the adequacy of Reserve for Diminution
in value of long term Investments as at the Balance Sheet date.
5. Subject to the above and further to our comments in the Annexure
referred to in paragraph 4 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
(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) in our opinion and to the best of our information and according to
the explanations given to us, the Balance Sheet, the Profit & Loss
account and the 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 except as regards accounting for
Super Annuation expenses on a cash basis as disclosed in Note A(j) in
5. Subject to above and further subject to the Notes on accounts in
general and in particular Note 6 of Schedule 22, as regards
non-disclosure of Statement of Investments as required, 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, 2010;
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.
6. On the basis of written representations received from the
Directors, as at March 31, 2010 and taken on record by the Board of
Directors, we report that none of the Directors are disqualified as at
March 31, 2010, from being appointed as a director in terms of clause
(g) of sub-section (1) of Section 274 of the Companies Act, 1956.
ANNEXURE TO THE Auditors Report
THE ANNEXURE REFERRED TO IN THE AUDITORS REPORT TO THE MEMBERS OF
LOGIX MICROSYSTEMS LIMITED (THE COMPANY) FOR THE YEAR ENDED MARCH
i. Fixed Assets:
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, subject to a need for strengthening of the
process of reconciliation with the fixed assets register. No Material
discrepancies were noticed on verification during the year.
c) The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company.
a) According to information and explanations given to us, the
management has conducted physical verification of inventory at
b) In our opinion and according to the information and explanation
given to us, 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) In our opinion and according to the information and explanations
given to us, the company has maintained proper records of inventory. As
explained to us, no material discrepancies were noted on physical
iii. During the year, the company has neither granted nor taken any
loans, secured or unsecured to/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, f & g) are
iv. In our opinion and according to information and explanations given
to us, having regard to the explanations that certain items purchased
are of special nature for which suitable alternative 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.
v. 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 die 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.
ix. a) The Company is generally regular in depositing undisputed
applicable statutory dues including Provident Fund, Sales tax, Wealth
Tax, Custom Duty, Cess and other statutory dues with the appropriate
authorities subject to certain delays in remittance of Tax deducted at
Source and Service Tax. There were no related amounts outstanding for a
period exceeding six months from the date they became payable as at the
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.
The investment register required to be maintained under Section 372A
(5) (a) of the Companies Act is in the process of being updated.
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 tfiey were
xvii. On the basis of an 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 not made any preferential allotment of shares to
parties and companies covered in the Register maintained under Section
301 of the Companies Act, 1956. Accordingly, paragraph 4 (xix) of the
Order is not applicable.
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,
Firm Registration Number: 004542S
Place: Bangalore Partner
Date: September 4th, 2010 Membership No : 205703