| 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
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