We have audited the attached Balance Sheet of M/s. AGNITE EDUCATION
LIMITED ("formerly known as Teledata Informatics Ltd as at September
30, 2011 and the Profit and Loss Account and the Cash Flow Statement of
the Company for the 18 months period ended on that date annexed
thereto, in which are incorporated the returns from the USA Branch and
Dubai Branch audited by another firm of auditors. These financial
statements are the responsibility of the management of the Company. Our
responsibility is to express an opinion on these financial statements
based on our audit and audit reports of overseas branches auditors.
1. We have conducted the 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 statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
2. As required by the Companies Auditors Report Order, 2003, as
amended, issued by the Central Government of India in terms of section
227(4A) of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in the said order.
3. Financial Statements of overseas branches which reflect total
assets of Rs 0.03 crores as at September 30, 2011, total revenues of Rs
33.31 crores and net profits of Rs 0.20 crores for the period then
ended, have been audited by branch auditors whose reports have been
furnished to us and our opinion, in so far as it relates to the amounts
included in respect of these overseas branches is based solely on their
reports.
4. a. We draw attention to Note No.22 of Schedule Q on booking of
revenue on sale of products to marketing agents and legal action against debtors, wherever necessary.
b. We are unable to comment on the ultimate reliability of
investments amounting to Rs 110.33 crores in Rainforest Trading Limited
and amount advanced to Baytech Inc BVI to the tune of Rs 186.13 crores,
in the absence of audited financial statements for the last five years
of their ultimate subsidiary Esys Technologies Pte Limited which is the
substance of the said investments/advances as referred to in Note No.19
of Schedule Q.
We are unable to express an opinion on the ultimate reliability of
the said amounts.
5. Further to our comments in the Annexure referred to above, we
report that:
i. 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;
ii. In our opinion, proper books of accounts as required by law have
been kept by the Company so far as appears from our examination of
those books and proper returns adequate for the purpose of audit have
been received from the branches not visited by us;
iii. 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
account;
iv. In our opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement dealt by with this report have been prepared in
all material respects in compliance with the applicable Accounting
Standards referred to in Section 211(3C) of the Companies Act, 1956
except for non-compliance in respect of the reinstatement of debtors,
creditors and advances in accordance with Accounting Standard 11 -
"Effects of Changes in Foreign Exchange Rates" (Revised);
v. On the basis of written representations received from the directors
as on September 30, 2011 and taken on record by the Board of Directors
of the Company, none of the directors are disqualified as on September
30, 2011 from being appointed as a Director in terms of Section
274(1)(g) of the Companies Act, 1956.
6. Subject to the comments made in paragraph 4 and 5 above and the
effect in respect of which on the profit and loss account of the
Company for the period under consideration is not ascertainable, in our
opinion and to the best of our information and according to the
explanations given to us, the said accounts together with the notes
thereon give in the prescribed manner the information required by the
Companies Act, 1956 of India 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 September 30, 2011 and
ii. In the case of the Profit and Loss Account, of the loss for the
period ended on that date.
iii. In the case of the Cash Flow statement, of the cash flows for the
period ended on that date.
ANNEXURE referred to in paragraph 2 of our report of even date to the
members of AGNITE EDUCATION LIMITED for the 18 months period ended 30th
September 2011.
1. a. The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed assets.
b. All the assets have not been physically verified by the management
during the period but 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 assets. No material discrepancies were
noticed on such verification.
c. The Company has not disposed off substantial part of its fixed
assets during the period.
2. In our opinion, the valuation and maintenance of records of
inventories is not applicable to the present activities of the Company.
Therefore, clause (ii) of paragraph 4 of the order is not applicable to
the Company.
3. a. i. According to the information and explanations given to us, the
Company has granted interest-free unsecured loans to Eight parties
listed in the register maintained under section 301 of the Companies
Act, 1956. The maximum balance outstanding during the period was Rs
197.04 crores and the period end balance of the loans was Rs 188.73
crores.
ii. As explained to us by the management, the other terms and
conditions of the above said loans are prima facie not prejudicial to
the interest of the Company.
iii. The principal amount has not fallen due in this period as the same
is payable on demand.
iv. There are no overdue amounts of more than rupees one lakh in
respect of the loans granted and accordingly, paragraph 4 (iiii)(d) of
the Order is not applicable to the Company.
b. i. According to the information and explanations given to us, the
Company has taken interest-free unsecured loans from three parties
listed in the register maintained under section 301 of the Companies
Act, 1956. The maximum balance outstanding during the period was Rs
1841.60 crores and the period end balance of the loans was Rs 165.63
crores.
ii. As explained to us by the management, the other terms and
conditions of the above said loans are prima facie not prejudicial to
the interest of the Company.
iii. The principal amount has not fallen due for repayment during the
period.
4. In our opinion and according to the information and explanations
given to us and having regard to the explanation that purchases of
certain items of contents and consumables for projects are for the
Company's specialized requirements for which suitable alternate sources
are not available to obtain comparable quotations, there are adequate
internal control procedures commensurate with the size of the Company
and the nature of its business with regard to purchase of contents
through approval by the technical committee, fixed assets and with
regard to the provision of services. In our opinion and according to
the information and explanations given to us , we have not observed any
continuing failure to correct major weaknesses in internal controls
except incase of the sale of goods and services wherein the Company
does not keep the details of the end users of the software licenses
sold through the agents.
5. i. In our opinion and according to the information and explanations
given to us, we are of the opinion that the transactions that need to
be entered in the register maintained under section 301 of the
Companies Act, 1956, have been so entered.
ii. In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements entered in the register maintained under section 301 of
the Companies Act, 1956 and exceeding the value of rupees five lakhs in
respect of any party during the period have been made at prices which
are reasonable having regard to prevailing market prices at the
relevant time. This being a technical matter, we have relied on the
management assessment.
6. In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits from public as
per the provisions of section 58A and 58AA or any other relevant
provisions of the Companies Act,1956. Accordingly, paragraph 4(vi) of
the Order is not applicable to the Company.
7. In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
8. The Company has not been required by the Central Government to
maintain cost records under section 209 (1) (d) of the Companies Act,
1956. Accordingly, paragraph 4(viii) of the Order is not applicable to
the Company.
9. i. According to the information and explanations given to us, the
Company is not regular in depositing with appropriate authorities
undisputed statutory dues including provident fund, employees' state
insurance, income tax, sales tax, wealth tax, service tax and other
statutory dues applicable to it. As explained to us, the Company did
not have any dues on account of customs duty and excise duty.
Further, since the Central Government has till date not prescribed the
amount of Cess payable under section 441A of the Companies Act, 1956,
we are not in a position to comment upon the regularity or otherwise of
the Company in depositing the same.
According to the information and explanations given to us, no
undisputed amounts payable in respect of the aforesaid dues were
outstanding as at September 30th, 2011 for a period of more than six
months from the date of becoming payable other than :
a. Provident fund previous year amounting Rs 0.29 Crores
10. The Company has no accumulated losses and has not incurred cash
losses during the immediately preceding financial year and during the
period of 18 months under audit.
11. Based on our audit procedures and according to the information and
explanations given to us, the Company has continuously defaulted in
repayment of dues to banks and the advances received by the Company
from the State Bank of India to the tune of Rs 314.99 crores and from
other banks to the tune of Rs 87.58 crores as on the Balance Sheet Date
have been classified as Non-Performing Assets (NPAs) by the Banks.
12. In our opinion and according to the information and explanations
given to us, the Company has not granted loans and advances on the
basis of security by way of pledge of shares, debentures and other
securities. Accordingly, paragraph 4(xii) of the Order is not
applicable to the Company.
13. 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
fund / society. Accordingly, paragraph 4(xiii) of the Order is not
applicable to the Company.
14. According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments. All securities and other investments have been held
by the Company in its own name except in case of investments in certain
foreign companies where shares are held by its directors/nominees as
referred to in Note No.19(a) of Schedule Q of notes to accounts wherein
the share certificate for the investments are not in possession of the
Company.
15. According to the information and explanations given to us, the
Company has given guarantees to banks and financial institutions for
loans taken by its wholly owned subsidiary Baytech Inc BVI for
investment in Esys Technologies Pte Limited, Singapore in respect of
which, we are informed that the same is not prejudicial to the
interests of the Company. The Company is of further opinion that the
corporate guarantees given to the parties other than the subsidiaries
are in the ordinary course of business and hence not prejudicial to the
interests of the Company.
16. In our opinion and according to the information and explanations
given to us, the Company did not have any Term Loans outstanding during
the period. Accordingly, paragraph 4(xvi) of the Order is not
applicable to the Company.
17. According to the information and explanations given to us and on
overall examination of the Balance Sheet of the Company, we report that
no funds raised on short-term basis have been used for long-term
investment.
18. According to the information and explanations given to us, the
Company has not made any preferential allotment of shares during the
period, to parties and companies covered in the register maintained
under section 301 of the Act. Accordingly, paragraph 4(xviii) of the
Order is not applicable to the Company.
19. According to the information and explanations given to us, the
Company has not issued any debentures during the period covered by our
audit. Accordingly, paragraph 4(xix) of the Order is not applicable to
the Company.
20. The Company has not raised any money by way of public issue during
the period. Accordingly, paragraph 4 (xx) of the Order is not
applicable to the Company.
21. According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For N R KRISHNAMOORTHY & CO.
Chartered Accountants
Firm Registration Number : 001492S
N R Krishnamoorthy
Partner
Membership Number : 20638
Place: Chennai
Date: 16.03.2012
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