We have audited the attached Balance Sheet of DATANET SYSTEMS LIMITED
as at March 31, 2011, the Profit and Loss account for the year ended on
that date annexed thereto and the Cash Flow statement for the year
ended on that date. These financial statements are the responsibility
of the Company''s 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 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 statements
presentation. We believe that our audit provides a reasonable basis for
As required by the Companies (Auditor''s Report) Order, 2003 (CARO)
issued by the Central Government in terms of Section 227(4A) 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.
Further to our comments in the Annexure referred to in paragraph 3
above, we report as follows:
(a) we have obtained all information and explanations which, to the
best of our knowledge and belief, were necessary for the purposes of
(b) in our opinion, proper books of account as required by law have
been maintained by the Company, so far as it appears from our
examination of those books of accounts.
(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
(d) in our opinion the the Balance Sheet, the Profit and Loss Account
and the Cash Flow Statement dealt with by this report are in compliance
with the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956;
(e) 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:
i) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2011;
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 Cash Flow statement of the cash flows for the year
ended on that date.
On the basis of written representations received from directors of the
Company as at March 31, 2011, and taken on record by the Board of
Directors, we report that none of the directors is prima facie
disqualified 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
(Referred to in paragraph 3 of our report of even date)
In terms of the information and explanations given to us and the books
and records examined by us in the normal course of audit and to the
best of our knowledge and belief, we state as under:
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of its fixed
(b) The fixed assets have been physically verified by the Management
during the year. We have been informed that no material discrepancies
were noticed on such verification and there is a regular programme of
verification which in our opinion is reasonable having regard to the
size of the company and nature of its business.
(c) Fixed assets disposed off during the year, in our opinion do not
constitute a substantial part of the fixed assets of the company.
(ii) (a) The inventory has been physically verified during the year by
the management at reasonable intervals.
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the company and the nature of its business.
(c) The company is maintaining proper records of inventory. The
discrepancies noticed on physical verification between the physical
stocks and book records were not material; however the same have been
properly dealt with the books of accounts.
(iii) (a) 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 Act.
As 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 Act, reporting under
clause 4 (iii) (b), (c) and (d) of Companies (Auditors'' Report) Order,
2003 is not applicable.
(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 nature of its
business for the purchase of inventory and fixed assets and for the
sale of software and other products. During the course of our audit, we
have not observed any continuing failure to correct major weaknesses in
(v) (a)According to the information and explanations given to us the
particulars of contracts and arrangements that needs to be entered into
the register maintained under Section 301 of the Companies Act, 1956
have been so entered.
(b) Where each of such transaction is in excess of Rs.5.00 Lakhs in
respect of any party, the transaction have been made at prices which
are prima facie reasonable having regard to the prevailing market
prices at the relevant time.
(vi) The Company has not accepted / renewed any
deposits from the public during the year.
(vii) We are of the opinion that there is no internal audit system
which is commensurate with the size and nature of its business.
(viii) As informed to us maintenance of cost records has not been
prescribed for the operations of the company by the Central Government
under clause (d) of sub-section (1) of the Section 209 of the Companies
(ix)(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 regular in depositing undisputed statutory dues including
Provident Fund, Income-tax(TDS) and Service Tax applicable to it during
the year with appropriate authorities. The undisputed dues which are
payable for a period of more than six months from the date they became
payable as at 31st March 2011 is NIL.
(b) According to the information and explanations given to us, there
are no amounts in respect of income tax, customs duty, wealth tax, cess
that have not been deposited with the appropriate authorities on
account of any dispute.
(x) The accumulated losses of the Company does not exceed fifty percent
of its net worth as at March 31, 2011. The company has not incurred
cash losses during the current financial year ended March 31, 2011.
(xi) In our opinion and according to the information and explanation
given to us, the company has not borrowed funds from any financial
institutions or banks and has not issued any debentures.
(xii) According to the information and explanations given by the
management, the Company has not granted any loans and advances on the
basis of security by way of pledge of shares, debentures and other
(xiii) The Company is not a chit fund / nidhi / mutual benefit fund /
(xiv) According to the information and explanations given by the
management, the Company is not dealing or trading in shares,
securities, debentures & other investments.
(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) According to the information and explanation given to us, the
company has not taken any term loan.
(xvii) According to the information and explanations given to us and on
overall examination of the Financial Statements of the Company, we
report that no funds raised on short term basis have been used for long
term investment. The company has not raised any funds on long term
(xviii) The company has not made any preferential allotment of shares
to parties or companies to be covered in the register maintained under
Section 301 of the Companies Act, 1956 and hence clause 4 (xviii) of
Companies (Auditors'' Report) Order, 2003 is not applicable.
(xix) The Company did not have outstanding debentures during the year.
Accordingly, no securities have been created.
(xx) The Company has not raised any money by public issue during the
(xxi) According to the information and explanations given by the
management, no fraud on or by the Company has been noticed or reported
during the year.
For CGS & Co.
Registrationn No: 005830S
A R Valisha Shakeel
Membership No. 203926
Place : Bangalore
Date : 6th August, 2011