| 1. Report on the Financial Statements
We have audited the accompanying financial statements of Digital
Electronics Limited ("the Company"), which comprise the Balance Sheet
as at March 31, 2014, and the Statement of Profit and Loss and Cash
Flow Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
2. Management's Responsibility for the Financial statements
Management is responsible for the preparation 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 Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("the Act") read with the General Circular
15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs
in respect of Section 133 of the Companies Act, 2013 and in accordance
with the accounting principles generally accepted in India. This
responsibility includes the design, implementation and maintenance of
internal control 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.
3. Auditors' Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. 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 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 control relevant to the Company's preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is not sufficient
and not appropriate to provide a basis for our audit opinion.
4. Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view subject to our observation and comments in Para No. 5 of our
report and Notes No: 1, 18, and 19 to the financial statements, is 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 March 31, 2014;
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.
4. Emphasis of Matter:
We draw attention to Notes No: 1, 18 and 19 to the financial statements
regarding the Company's intention to continue to serve the market after
discontinuance of its manufacturing and trading operations from FY
2005-06 onwards by focusing on exploration of new line of business and
developing management training centre. Based on the management
projections for the future, the financial statements have accordingly
been prepared on going concern basis. The company has incurred major
expenses towards foreign travelling of directors and business promotion
as referred to in Note No: 19 to the financial statements; which are
without proper evidences and supporting. However, the management had
represented that these expenses are related to the business of the
company and also have been approved by the Board of Directors of the
company. We are unable to comment on the nature of expenses and
consequential effects, if any on the financial statements, arising from
the above. Our opinion is not qualified in respect of this matter.
6. Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2003
("theOrder") issued by the Central Government of India in terms
of sub-section (4A) of section 227 of the Act, we give in the Annexure
a statement on the matters specified in paragraphs 4 and 5 of the
Order.
2. As required by section 227(3) of the Act, 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 purpose 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.
bb) Since the Company does not have any branches, the report on the
accounts of the branch offices audited by other auditor under section
228(3)(c) of the Companies Act, 1956 is not applicable;
c) the Balance Sheet, 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 Balance Sheet, Statement of Profit and Loss, and
Cash Flow Statement comply with the Accounting Standards referred to in
subsection (3C) of section 211 of the Companies Act, 1956 read with the
General Circular 15/2013 dated 13th September, 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of the Companies Act, 2013.
and
e) on the basis of written representations received from the directors
as on March 31, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2014, 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 Independent Auditors' Report
Referred to in Paragraph 1 under the heading of "report on other legal
and regulatory requirements" of our report of even date.
1. In respect of fixed assets:
(a) The company has maintained proper records showing full particulars
including quantitative details and situation of its fixed assets.
(b) As explained to us, fixed assets have been physically verified by
the management at reasonable intervals; no material discrepancies were
noticed on such verification.
(c) In our opinion, the Company has not disposed off a substantial part
of its fixed assets during the year and the going concern status of the
Company is not affected.
2. In respect of inventories:
As explained to us, during the year no trading activity was carried
out, and hence clause 4(ii) of the order is not applicable.
3. In respect of loans, secured or unsecured, granted or taken by the
Company to/from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
(a) According to the information and explanation given to us, the
company has not granted any loans, secured or unsecured to companies,
firm or other parties covered in the register maintained u/s 301 of the
Act.
(e) According to the information and explanations given to us and on
the basis of our examination of the books of account, the Company has
not taken loans from companies, firms or other parties listed in the
register maintained under Section 301 of the Companies Act, 1956. Thus
sub clauses (f) & (g) of paragraph 4 of the Order are not applicable to
the company.
4. In our opinion and according to the information and explanations
given to us, there is generally an adequate internal control procedure
commensurate with the size of the company and the nature of its
business, for the purchase of fixed assets and payment for expenses.
During the course of our audit, no major instance of continuing failure
to correct any weaknesses in the internal controls has been noticed.
5. In respect of the contracts or arrangements referred to in section
301 of the Companies Act, 1956.
a) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, the
particulars of contracts or arrangements referred to in section 301 of
the Act have been entered in the register required to be maintained
under that section.
b) As per information & explanations given to us and in our opinion,
the transaction entered into by the company with parties covered u/s
301 of the Act does not exceeds five lacs rupees in a financial year
therefore requirement of reasonableness of transactions does not
arises.
6. According to the information and explanations given to us, the
Company has not accepted any deposits from the public covered under
section 58A and 58AA of the Companies Act, 1956. Therefore, the
provisions of clause (vi) of paragraph 4 of the Order are not
applicable to the company.
7. In our opinion and as per information & explanations given by the
management, the Company has an internal audit system commensurate with
its size and the nature of its business.
8. As per information & explanation given by the management,
maintenance of cost records has not been prescribed by the Central
Government under clause (d) of sub-section (1) of section 209 of the
Act.
9. In respect of statutory dues:
(a) According to the records of the company, undisputed statutory dues
including Provident Fund, Investor Education and Protection Fund,
Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service
Tax, Custom Duty, Excise Duty, cess, to the extent applicable and any
other statutory dues have generally been regularly deposited with the
appropriate authorities. According to the information and explanations
given to us there were no outstanding statutory dues as on 31st of
March, 2014 for a period of more than six months from the date they
became payable.
(b) According to the information and explanations given to us and as
per the records of the Company, the following dues of sales tax, income
tax, wealth tax, service tax, customs duty, excise duty and cess have
not be deposited on account of some dispute or are partly deposited
under protest
Amount Forum where
Sr Period to Name of Nature of dispute is
No which relates the Statute the dues (Rs.) pending
1 AY 2005-06 Income Tax Income tax 39,85,596 High Court
Act, 1961
2 AY 2007-08 Income Tax Income tax 93,43,650 ITAT
Act, 1961
3 AY 2007-08 Income Tax Income tax 70,93,850 ITAT
Act, 1961 [Penalty
U/s 271 (1C)]
4 AY 2010-11 Income Tax Income tax 35,337 ITO
Act, 1961
10. The Company does not have any accumulated loss. However, it has
incurred cash loss during the financial year covered by our audit and
in the immediately preceding financial year.
11. Based on our audit procedures and on the information and
explanations given by the management, we are of the opinion that, the
Company has not defaulted in repayment of dues to a financial
institution, bank or debenture holders.
12. 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.
13. The Company is not a chit fund or a nidhi /mutual benefit
fund/society. Therefore, the provision of this clause of the Companies
(Auditor's Report) Order, 2003 (as amended) 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. The company has invested surplus funds in marketable
securities and mutual funds. According to the information and
explanations given to us proper records have been maintained of the
transactions funds and contracts and timely entries have been made
therein. The marketable securities and mutual fund have been held by
the company in its own name.
15. According to the information and explanations given to us, the
Company has not given any
16. Based on our audit procedures and on the information given by the
management, we report that the company has not raised any term loans
during the year.
17. Based on the information and explanations given to us and on an
overall examination of the Balance Sheet of the Company as at 31st
March, 2014, we report that no funds raised on short- term basis have
been used for long-term investment by the Company.
18. Based on the audit procedures performed and the information and
explanations given to us by the management, we report that the Company
has not made any preferential allotment of shares during the year.
19. The Company has no outstanding debentures during the period under
audit.
20. The Company has not raised any money by public issue during the
year.
21. Based on the audit procedures performed and the information and
explanations given to us, we report that no fraud on or by the Company
has been noticed or reported during the year, nor have we been informed
of such case by the management.
FOR VASANI & THAKKAR
CHARTERED ACCOUNTANTS
Firm Regi no: 111296W
Sd/-
PLACE : MUMBAI (R. N. VASANI)
DATED: 25-Aug-2014 PARTNER
M No. 12217 | 