We have audited the attached Balance Sheet of Megasoft Limited (the
Company) as at 31 December 2010 and the related Profit and Loss
Account and Cash Flow Statement for the year ended on that date annexed
thereto, which we have signed under reference to this report. 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 the 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.
As required by the Companies (Auditors Report) Order, 2003 (the
Order), as amended, issued by the Central Government of India in terms
of sub- section (4A) of Section 227 of the Companies Act, 1956 (the
Act), we enclose in the Annexure a statement on the matters specified
in paragraphs 4 and 5 of the said Order. Further to our comments in
the Annexure referred to 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
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, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
(d) 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 Act;
(e) On the basis of written representations received from the
directors, as on 31 December 2010, and taken on record by the Board of
Directors, none of the directors is disqualified as on 31 December 2010
from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Act;
(f) In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements together
with the notes thereon and attached thereto give in the prescribed
manner the information required by the Act 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 31 December 2010; (ii) in the case of the Profit and Loss
Account, of the profit for the year ended on that date; and (iii) in
the case of the Cash Flow Statement, of the cash flows for the year
ended on that date.
Annexure to the Auditors Report [Referred to in paragraph 3 of the
Auditors Report of even date to the Members of Megasoft Limited on the
Financial Statements for the year ended 31 December 2010]
(1) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The Company has a phased programme of physical verification of its
fixed assets which, in our opinion, is reasonable having regard to the
size of the Company and the nature of its assets. In accordance with
such programme, the Management has physically verified certain fixed
assets during the year and no material discrepancies were noticed on
such verification.
(c) Fixed assets disposed off during the year were substantial (refer
note no.21 of schedule no.17). However as per the management
representation this disposal will not affect the going concern
assumption.
(2) In our opinion and according to the information and explanations
given to us, in view of the nature of activities of the Company, the
provisions of Clause 4(ii) relating to inventory is not applicable to
the Company.
(3) 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 (the
Act). Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f) and
(iii)(g) of paragraph 4 of the Order are not applicable.
(4) 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 with regard
to purchase of fixed assets and the sale of services. We have not
observed any major weakness in the internal control system during the
course of the audit.
(5) (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 Act have been entered in the register
maintained under that section. (b) In our opinion and according to the
information and explanations given to us, the transactions made in
pursuance of contracts or arrangements exceeding Rs. 5 lakhs in respect
of any party during the year, which have been made at prices which are
reasonable having regard to prevailing market prices at the relevant
time.
(6) The Company has not accepted any deposits from the public and hence
the directives issued by the Reserve Bank of India and the provisions
of Sections 58A, 58AA or any other relevant provisions of the Act and
the Companies (Acceptance of Deposit) Rules, 1975 with regard to the
deposits accepted from the public are not applicable.
(7) In our opinion, the Company has an internal audit system,
commensurate with its size and the nature of its business.
(8) According to the information and explanations given to us, the
Central Government has not prescribed the maintenance of cost records
under Section 209(1)(d) of the Act in respect of services carried out
by the Company.
(9) (a) According to the information and explanations given to us, and
on the basis of our examination of the books of account, the Company
has been generally regular in depositing with the appropriate
authorities undisputed statutory dues including provident fund,
employees state insurance, income-tax, wealth tax, service tax,
sales-tax, customs duty, cess and other material statutory dues
applicable to it.
(b) According to the information and explanations given to us, no
undisputed dues payable in respect of provident fund, employees state
insurance, income-tax, wealth tax, service tax, sales-tax, customs
duty, cess and other material statutory dues were outstanding as at 31
December 2010 for a period of more than six months from the date they
became payable.
(c) According to the information and explanations given to us there are
no such statutory dues that have not been deposited with the
appropriate authorities on account of any dispute.
(10) 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.
(11) In our opinion and according to the information and explanations
given to us, the Company has delayed repayment of dues aggregating to Rs.
100 million to a bank for a period of three to four months. However,
there were no dues to the bank as of the balance sheet date.
(12) According to the information and explanations given to us, the
Company has not given any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities and hence
the question of maintenance of adequate records for this purpose does
not arise.
(13) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund, nidhi, mutual benefit fund
or a society.
(14) In our opinion and according to the information and explanations
given to us, the Company is not dealing or trading in shares,
securities, debentures and other investments.
(15) According to the information and explanations given to us, the
Company has given corporate guarantees for foreign currency loans taken
by wholly-owned subsidiaries from a bank. The terms and conditions of
such guarantees are not prejudicial to the interest of the Company.
(16) According to the information and explanations given to us, the
Company has not availed any new term loan during the year.
(17) According to the information and explanations given to us, and on
an overall examination of the Balance Sheet of the Company, funds
raised on short-term basis have, prima-facie, not been used for long
term investment.
(18) During the year, the Company has not made any preferential
allotment of securities to companies / firms / parties covered in the
register maintained under section 301 of the Act.
(19) The Company has not raised any money by public issues during the
year.
(20) To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the Company
has been noticed or reported during the year.
for Srikanth & Shanthi Associates for TN Rajendran & Co.
Chartered Accountants Chartered Accountants
Firm Registration No.004006S Firm Registration No.005080S
MC Srikanth TN Rajendran
Partner Partner
Membership No.18588 Membership No.28778
Hyderabad
28 February 2011
